The SMB NOW Blog

microbusinesses

Small Businesses Are Borrowing Again

November 23, 2009 by Sarah Leave a Comment

Small Businesses Are Borrowing Again

SMB owners are borrowing money again, or so says a study conducted by PayNet Inc for Reuters. The study found that smaller “microcompanies” are gaining confidence in their business and enjoying an overall improved financial health, which is good news for the economy. These businesses are often thought of as the best hope for job creation during economic recovery.

According to the study, which examined loans, leases, and lines of credit activity, businesses with less than $100,000 in outstanding debt are borrowing cautiously to invest money into their own companies. Financing originations are still down but they are no longer failing faster than the originations for larger small businesses (or those who have debt totalling above $100,000). This is an improvement over the last three years.

“This looks like an inflection point,” William Phelan, the president of PayNet, said of the study. “These little businesses are a leading indicator and the signals they’re sending are improving.”

Another encouraging sign is that delinquencies among these companies peaked at some point during the spring of this year, but have since began to improve. Phelan says a correlation can be made between microbusiness borrowing delinquencies and GDP and that makes for another encouraging sign.

Currently, most recovery efforts have come from a government stimulus effort, including the auto industry’s “cash for clunkers” and $8,000 tax credits fro first-time home buyers. But experts say a true recovery must come from private industry and customer demand, particularly small businesses.

And while critics have blasted banks who received government bailout money for not turning around and investing the money into the economy, several big banks have recently announced plans to do more small business lending. These institutions include Citigroup, J.P. Morgan, and Goldman Sachs.

PayNet provides risk management tools to the commercial lending industry. The company collects real-time loan information, including orginations and delinquencies, from over 225 leading U.S. capital equipment lenders and its proprietary database encompasses more than 16 million old and new contracts worth about $700 billion.

Tagged: economic recovery, economic stimulus, economy, loans, microbusinesses, PayNet, Small businesses, SMB

Follow Us On Social Media:

RSS
Follow by Email
Facebook
Facebook
fb-share-icon
Twitter
Visit Us
Follow Me
Tweet
Pinterest
fb-share-icon
LinkedIn
Share
Subscribe to Email Updates:

Recent Posts

  • How the Buy American Movement supports American Businesses
  • Getting Started with Google My Business
  • Celebrate National Small Business Week with Us
  • Service and Etiquette Tips for SMBs
  • How Visa Issues Can Impact Your SMB
  • New Year’s Resolutions for Small Businesses
  • The Role of Social Media for Small and Mid-Size Businesses
  • How to be authentic in business
  • 5-Step Financial Checklist To Complete Before The End Of 2016
  • Why SMB’s Have to Switch to HTTPS

Blogroll

  • SMB News Now

SMB Technology Sites

  • A Computer BLog
  • A Copier BLog
  • A Laptop Blog
  • A Projector Blog
  • A Server Blog
  • A Tablet Blog
  • Projector Rental Rates
  • SMB Audio Visual Rentals
  • SMB Computer Rental
  • SMB File Server Rentals
  • SMB Laptop Rentals
  • SMB Tablet Rentals

Archives

Contact Us:

Have a story to contribute or a question about our site? Email us at web@xponex.com.

Copyright © 2023 The SMB NOW Blog.

Theme by themehall.com.