Smart Borrower Blog

Archive for the ‘Business Borrowing’ Category

Small Business Loan Approval and Demand Falls in April

Both demand for and approval of small business loans declined in the U.S. in April, according to a recent survey from Biz2Credit, a result of increased fees and poor job creation numbers. The Biz2Credit Small Business Lending Index reported that big banks (those with more than $10 billion in assets) approved just 10.6 percent of all small business loan requests in April, down from 10.9 percent in April, and down from 11.6 percent in March 2011. The big bank approval decrease is not terribly surprising as they have kept very tight lending standards in the post-financial crisis period, but a... more »

Small Business Lending Slows in February

Lending to small businesses in the U.S. flatlined in February, according to a new index reading, as lending figures for January and February were revised downward as well. The Thomson Reuters/PayNet Small Business Lending Index, which measures total financing volume to U.S. small businesses, was almost unchanged in February at 98.3, from 98.2 in January. And while business borrowing is up 14 percent from the previous year, it still represents the slowest yearly growth rate since September. “It’s pretty uninspired,” PayNet founder Bill Phelan said in an interview as quoted in a Reuters article. “We see this faltering as a... more »

Small Businesses Look to Unconventional Sources for Funding

Since the financial crisis several years ago, small businesses have had a tough time securing funding for their operations as banks have upped their lending standards and pulled back from investment. While there are some signs that major banks are starting to open up their lending spigots slightly for small businesses, the credit and collateral requirements remain difficult for many owners to meet. Where many U.S. small firms used to be concentrated in the manufacturing industry with plenty of land and equipment to put up as collateral, the small business arena has now largely shifted to the service industry without... more »

Small Business Loans Increase But Obstacles Remain

Total lending to U.S. small businesses grew again in November, according to the latest Thomson Reuters/PayNet Small Business Lending Index, adding to a positive trend. The Index, a measure of overall small business loan volume, posted an 18 percent increase in November 2011 from November 2010, reaching the highest level since February 2008. This yearly upswing is an indication of: “A new phase of the business cycle,” PayNet’s founder said in a Reuters article . “Businesses are betting on the future with increased investment spending.” Small business owners are also getting better at keeping up with their loans. The Thomson... more »

Small Business Lending Suggests Stronger Economy

U.S. small businesses are borrowing more these days, after having consolidated and tightened up during the recession. Increased borrowing points to a stronger, more solid economic foundation than before the recession, according to PayNet President William Phelan. The Thomson Reuters/PayNet Small Business Lending Index, a measure of the total loan activity to small businesses, grew 20 percent in October marking the 15th straight month of double-digit increases in borrowing. And as lending standards have tighten considerably since the economic crash, it is implied that small businesses have improved their risk profiles. Plus, increased lending shows that businesses are looking more... more »

Small Business Borrowing Slows in September, But Stronger Overall

Matters in the small business arena may not be back to “good” yet, but there are signs of progress, according to recent data on small business loans. The Thomson Reuters/PayNet Small Business Lending Index, a measure of total U.S. small business financing volume, rose 14 percent in September, a more modest pace than the revised 18 percent growth from August. The silver lining is that it still marks the 14th consecutive month of double-digit increases in borrowing among smaller firms. PayNet has tracked small business borrowing for years, and found that the volume of loans shrunk dramatically during 2008 and... more »

Small Business Loans Are Hard To Come By

If you own a small business and are looking for funding you probably will find getting a loan is not an easy task. Forbes reports that since small business bank loans peaked in 2007 reaching nearly 2.5 million, they have dropped drastically by about 39%. As of June of 2011 bank loans made to small businesses had dropped to levels not seen since 1999 and at that time there were almost six million less small businesses throughout the country, compared to today. Why such a decline? The economic downfall is partly to blame, but the Forbes article also points out... more »

Fed Hopes to Lower Interest Rates, But Will It Help?

In order to “support a stronger economy” and keep inflation at the right level, the Federal Reserve decided today to purchase bonds with longer maturities, while selling off its shorter-term bonds, in hopes that long-term interest rates will continue to fall. The Federal Open Market Committee announced that it will buy $400 billion worth of Treasury securities with maturities of six to 30 years, over the next eleven months. It will simultaneously sell off an equal amount of its Treasuries that mature within three years or less. “This program should put downward pressure on longer-term interest rates and help make... more »

Access to Capital Remains a Problem for Small Businesses

In a new survey, small businesses made it clear that getting the loan funding they need is still a major problem in today’s economy. The survey of about 7,502 small businesses with less than $5 million in annual revenues, conducted by Pepperdine University’s Private Capital Markets Project, found that one out of every four owners says that access to capital is their company’s greatest obstacle. Other major concerns include economic uncertainty (one out of five) and taxes and regulations (one out of four.) Credit for these businesses apparently remains tight. Less than half (44.5 percent) of the 1,667 small companies... more »

Lending Standards Eased Slightly Again in Latest Quarter

Banks loosened their lending standards on several types of loans during the past three months, according to the Federal Reserve’s survey of senior loan officers . Those finding the easiest access to loan capital are large and medium-sized businesses, as well as car buyers. In the survey, which polled 55 domestic and 22 foreign banks, 21.8 percent of all banks said that they eased their lending standards for large companies in the third quarter from the second. And 20 percent said they had made it easier for auto loan applicants to get approved. “In spite of the equity market volatility,... more »