Credit conditions eroded slightly during the fourth quarter of 2013 after reaching high levels earlier in the year according to the Fourth Quarter 2013 CBIA/Farmington Bank Credit Availability Survey.

Overall, the credit picture is slightly better than one year ago but still has a way to go to reach the record levels attained back in 2007, before the economic recession.

“While conditions are not ideal, the credit spigot is open for businesses,” Connecticut Business and Industry Association economist Peter Gioia said today.

“Together with low interest rates, conditions can continue to support growth.”

The Farmington Bank Credit Availability Index (FBCAI) recorded the fourth quarter index level at 38.8, down from the third quarter index figure of 51.4.

On a positive note, the fourth quarter reading also represents a 29% increase from the level recorded one year ago.

“From the credit surveys, we’ve seen significant improvement year after year,” said John Patrick, president and CEO of Farmington Bank. “Banks like ours are ready to lend to commercial businesses in Connecticut.”

The FBCAI’s future expectations component, which measures credit availability three to six months from now, stood at an index level of 40.9, down 20% from last quarter’s reading of 51.0.

Negative opinions about future credit conditions outweighed positive opinions by almost a 2:1 margin, indicating that credit conditions are still likely to be challenging for many firms as they move through the year.

“It’s a little disappointing to see the fourth quarter credit readings slip a bit when we’ve had other positive signs that the Connecticut economy is rebounding,” said Don Klepper-Smith, chief economist and director of research at DataCore Partners.

“I guess that means that overall recovery is fairly linear. I consider this a minor setback for now. Given the smaller sample sizes in recent readings, let’s see how the credit readings play out this year. Hopefully we can recapture some of that positive momentum.”

Only 17% of respondents rated conditions as either good or excellent, while 53% rated them average.

In addition, when asked how they would use credit if available, almost half (46%) stated they would invest in new plant and equipment.

Another 19% said that they would use their funds to maintain their current workforce.

The Fourth Quarter 2013 CBIA/Farmington Bank Credit Availability Survey was emailed to approximately 1,900 Connecticut businesses in January 2014. A total of 204 responded, for an 11% response rate and a margin of error of +/- 6.9%.