Smart Borrower Blog

Small Businesses Press Pause on Borrowing in March

May 3rd, 2017 @ 8:49 PM by Amber Nelson

U.S. small businesses held off on borrowing more money in March, waiting out the uncertainties of the domestic policies.

According to the Thomson Reuters/PayNet Small Business Lending Index, business borrowing slipped in March to a reading of 134, down 1 percent from a year earlier. Compared with February though, the Business Lending Index rose 4 percent.

While the stock markets have bounced up and down amid speculation about the effects of the promised tax cuts by the Trump administration, small business owners appear to be keeping their heads down, waiting for the hype to die down and to see how the dust actually settles. “They didn’t get sucked into all the euphoria of public markets; they are just, ‘Wake me up when we are there,'” said PayNet’s chief executive Bill Phelan in an interview. “There’s not going to be any kind of enthusiasm.”

The Index is a bellwether of the direction of gross domestic product one to two quarters down the road. For example, the December Small Business Index showed a decline to a reading of 121.3, down from 128.8 and a few months later, GDP was reported to have grown by just 0.7 percent in the 2017 first quarter, the slowest annual pace in three years.

The healthcare industry showed the most hesitancy to borrow, with a decrease of 13 percent in March. Congress’ failed attempt to repeal and replace Obamacare may have many healthcare companies holding off on investing in new systems or employees as they wait to see if any major policies changes will occur.

A separate PayNet index found that small business loan delinquencies of 30 days or more were unchanged in March at 1.68 percent. That is a sign that many companies are in good financial health and the lack of borrowing is not an indication of heavy debt loads, but more of caution about the economic climate.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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