Economy Boosts SMB Borrowing Activity

New data from small business credit analysis firm PayNet finds the small and medium-sized business (SMB) lending landscape expanded significantly toward the end of 2017.

PayNet announced its latest “U.S. Small Business Credit Monthly Report” on Monday (Jan. 8), which showed its Thomson Reuters/PayNet “Small Business Lending Index” rose by 4.1 percent for the month of November. The index is now 7 percent higher than it was one year prior, PayNet noted.

“After lagging for most of the year, small business investment is finally starting to pick up,” said William Phelan, PayNet President, in a statement. “Financial health remains solid, and small businesses are well-positioned to expand through responsible borrowing.”

The Thomson Reuters/PayNet “Small Business Delinquency Index” has remained steady month-over-month, with 1.4 percent of repayments 90 days past-due. According to analysts, the Federal Reserve’s interest rate hikes — which have happened three times in the last year — are behind the modest-yet-steady delinquency rates.

Overall, Phelan added, the outlook is positive.

“The economy appears to be firing on all cylinders, and the stock market surge shows that public companies have been taking advantage of the pro-business environment,” he stated. “Now, small businesses are stepping in to get a piece of the pie.”

Researchers found that 11 of 18 sectors saw increases in borrowing among SMBs in the last year. Seven of them saw lending activity increase by more than 4 percent, PayNet said, including construction. Healthcare and finance and insurance experienced declines in small business lending, however.

PayNet’s report was released soon after several other surveys assessing small business financial activity and health. According to the CBIZ “Small Business Employment Index,” for example, which was released last week, 1.55 percent more jobs were added by small businesses last month compared to the November count. In addtion, hourly earnings for U.S. SMBs hit $26.14 on average, Paychex data found.