Small Business Development Encouraged With Increased Lending

Banks are encouraging small business development with increased lending to the industry for the first time this year.

The Thomson Reuters/PayNet Small Business Lending Index rose to 110.5 in April, up from a revised 99 in March (the original March number was reported at 98.5). The number of loans given to small businesses had previously fallen every month since the beginning of this year, but the index is now up 17 percent over the same time last year. The report is a seasonally adjusted measurement of new commercial loans and leases to businesses.

Increased lending for small businesses typically results in a long-term trend of growth and employment. Reuters points out that small business owners that take out loans often use the money for new tools, equipment and factories. This capital investment then can lead to new hiring.

Other good news comes from the Thomson Reuters/PayNet Small Business Delinquency Index, which reports that the number of delinquencies in small business loans fell slightly in April to 1.56 percent. This is down from a high of 4.73 percent of accounts overdue in August 2009. Reuters reports this as a sign of lessening financial stress at small businesses as loans are being paid back on time.

This index is in line with another recent report, the Small Business Optimism Index from the National Federation of Independent Business (NFIB), that shows overall optimism among small businesses rising in April. The report shows that only 2 percent of small businesses owners say financing was their top problem in April.

Additionally, 31 percent of owners say that all their credit needs were met. Though the number may seem low, 50 percent said they are not interested in a loan at all and an additional 13 percent did not answer the question, which the NFIB takes to mean they also are not interested.

The report also shows that job creation in small businesses is up for the fifth month in a row. Nearly half of all owners — 49 percent — attempted to make at least one hire in the three months leading up to the survey. Overall, the Small Business Optimism Index rose 2.6 points over March to 92.1 points. Banks are helping small business development with increased lending, and it appears small business owners are responding with optimism.

[cf]skyword_tracking_tag[/cf]

Please Leave A Comment

comments

Related posts:

Small Business Optimism Up for Second Straight Month Survey Reveals Most Small Business Owners Haven’t Applied for Loans SBA Report Unveils the Top Small Business Lenders U.S. Economy Shows Positive Signs with Decreased Wholesale Inventories and Increased Sales Consumer Spending Increased at the End of 2013