Smart Borrower Blog

Small Business Borrowing Climbs for 5th Straight Month


Apr 18th, 2018 @ 5:00 PM by Amber Nelson


U.S. small businesses took out more loans in February, according to data from small business information provider PayNet, a sign of greater confidence in the economy even as loan delinquencies rose slightly.

The Thomson Reuters/PayNet Small Business Lending Index jumped to 144.8 in February, up 1.0% from January and 12% from the previous years. It is also marks the fifth straight month of increases and the second-highest level in the Index’s history.

“At this time last year, small businesses were generally still hunkered down and unwilling to borrow in great amounts to invest and expand,” said PayNet President William Phelan. “But it looks like the switch finally flipped last fall, and we’re now seeing the small business community getting back in the game with aggressive increases in borrowing and investment.”

The growth in business loan borrowing was led by the Construction industry with a 7.4% increase from the previous year, the Public Administration industry with a 7.3% rise and the Transportation & Warehousing sector that borrowed 7.2% more than the year before.

The Agriculture sector has increased its borrowing for four consecutive months, a major accomplishment considering that prior to November 2017 business loan borrowing in that industry had fallen for three straight years.

At the same time, small business loan delinquencies (those loans 31 to 90 days past due) have increased to 1.39% in February, rising from 1.34% last year. The biggest jumps in late payment rates were in Construction with a 16 basis point year-over-year rise and Retail with an increase of 8 basis points. Regionally, delinquencies grew in seven of the 10 largest states. PayNet points out that rates still remain low historically though.

“Elevated confidence levels among small businesses indicate an optimistic outlook for the year ahead, and a healthy economy should continue to support lending activity moving forward,” said Phelan. “In our view, the biggest question is not whether the current trend of small business expansion will continue, but whether banks and other lenders are prepared to respond to increased small business demand for C&I loans.”

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About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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