Glimmers of Hope All Over Small Business Market

It may not be time to celebrate yet, but there are some exciting signs of life coming out of the small business lending world this week. And as small businesses are the largest creator of U.S. jobs, this can only be good news for the economy as a whole.

Small businesses borrowed more money in November, according to the Thomson Reuters/PayNet Small Business Lending Index, an indication that the earlier lending freeze is thawing out. The index rose to 88.3 in November, up from 79.8 in October, and up a dramatic 17 percent over the previous year’s figures when the index read 75.3.

November’s progress marks the fourth month of double-digit increases as well as the ninth consecutive monthly increase in small business lending, based on a survey of loans, leases, and lines of credit extended to small firms. It is also the best index reading since September 2008.

“This provides definitive proof that the small business economy is continuing to grow and recover,” Bill Phelan, PayNet’s president, said in an interview as quoted in an ABC article. “Everywhere you look at the index, it’s very, very positive.”

But wait…there’s more! Another recent report from PayNet showed that companies are doing a better job of keeping up with their business loans. The number of moderately delinquent loans (those 30 days of more late) fell to 2.51 percent in November from 2.65 percent in October. They were up to 4.26 percent one year earlier.

“Non-current balances continue to decline,” Phelan said. “So asset quality for lenders is continuing to improve, too.”

This is huge because the safer that small business loans appear to be, the more investors will pump financing into the sector, giving the economy some room to breathe and grow. So while we’ll just have to wait it out and see, it definitely looks like a good trend is developing here.