Small firms continued to reduce their delinquent debt over the past year and their credit quality followed suit, according to the latest data from Experian.

Consumer confidence is high and small business credit quality has shown improvements throughout the quarter due to personal income growth, retail sales increases and steady employment gains, the Experian/Moody's Analytics Small Business Credit Index revealed.

Findings from the report showed that small firms have steadily reduced their delinquent debt over the past year. Balance volumes for all business sizes also receded measurably from a year earlier, bringing down delinquency rates, according to the report.

Further, credit quality has strengthened for every business size. At an average of 10.2%, the total share of delinquent dollars is 2.4 percentage points lower than it was a year ago and is at the lowest point on record.

“During this period of modest growth, small businesses have improved their credit profile by decreasing delinquent debt and meeting financial obligations in a more timely fashion,” said Joel Pruis, Experian's senior business consultant.

Businesses of all sizes need to maintain a strong credit profile, as it enables them to more easily secure the credit or funding they need to grow their enterprise, Prius suggested.

Regionally, delinquency rates were significantly lower than the national average for small companies in Idaho, Wyoming, Arizona and Utah, the report showed.

At the top 10th percentile among metro areas for small business credit quality were Houston, Las Vegas, Phoenix, Salt Lake City, San Diego and San Francisco.

“The economy has held up better than anticipated so far this year in the face of large tax increases and government spending cuts, which has supported improved small business borrowing and credit quality,” said Mark Zandi, chief economist at Moody's Analytics.