Thursday, June 30, 2011

Small Business Lending Heating Up?

From Reuters:

Borrowing by small U.S. businesses rose at a record pace in May, data released by PayNet Inc on Thursday showed, a sign that economic growth is poised to pick up in coming months.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, rose 26 percent in May from a year earlier, PayNet said.

The index is now at its highest since July 2008, two months before the collapse of Lehman Brothers and the near derailment of the world financial system.


"If small businesses are taking these kind of chances, taking risks, making long term investments, they are seeing some long-term opportunities on the horizon," PayNet founder Bill Phelan said in an interview. "That's got to be a big positive sign for the economy."

Separate data also released on Thursday showed small business loan defaults at their lowest in five years, tying records set in April and May 2006.

Accounts in moderate delinquency, or those behind by 30 days or more, fell in May to 1.95 percent from 2.06 percent in April, PayNet said on Thursday.

Accounts 90 days or more behind in payment, or in severe delinquency, fell to 0.59 percent in May from 0.63 percent in April.

I have never heard of Paynet, but thought this was an interesting development in light of recent news.