There’s Good News and Bad News About the Small Business Economy

By Karen Axelton

Are small businesses taking a cue from the nation’s consumers—in other words, borrowing less and paying down debts? That seems to be the case based on two separate reports out from PayNet.

The latest Thomson Reuters/PayNet Small Business Lending Index declined in March, which could indicate slowing in the nation’s economic growth. The Index tracks the overall volume of lending to small businesses nationwide. In March, it declined to 98.5, down from 101.8 in February. Although small business borrowing did increase 10 percent compared to the same time last year, that is the smallest 12-month growth rate since January 2011.

On the plus side, a separate indicator from PayNet, its most recent 30+/90+ Day Delinquency report, found that small businesses are having no trouble paying off their debts. The report, which uses real-time datat to measure the percentage of loans to small and medium-sized businesses that are past due by 30 or more days and 90 or more days, found that accounts in moderate delinquency (late 30 days or more) dropped to 1.39 percent in March, down from 1.47 percent in February. At their height in May 2009 these accounts hit 4.42 percent.

Accounts in severe delinquency (late 90 days or more) hit a record low of 0.34 percent in March. That’s down from 0.36 percent in February. And accounts in default (late 180 days or more) dropped to 0.48 percent in March, down from 0.50 percent in February.

There’s good news and bad news in these two reports. Clearly, the fact that business delinquency is down is a positive sign for the health of the nation’s small businesses. At the same time, the lack of interest in borrowing could indicate small businesses are either feeling uncertain about the nation’s economy, have given up on getting the financing they need, or are feeling too cautious to expand their companies.

What financial steps are you taking in your business these days? Are you focused on debt repayment, or on expansion financing?

Image by Flickr user Vectorportal (Creative Commons)

This entry was posted on Tuesday, May 15th, 2012 at 6:00 am and is filed under Accounting and Taxes, Capital Access, Compliance, Raising Capital, Small Business, small business, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.


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