Small Business Lending Increases 4% Y/Y in January

The January 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) rose 4% year-over-year, but fell 8% month-over-month. The fall December reflects the seasonality of small business investment which tends to be heavier at year end. The the 4% year-over-year increase broke a negative trend that took hold during election season.

“While not rocketing ahead at the double-digit rate of the stock market, small businesses got into the action in January,” said William Phelan, president of PayNet. “Solid is further shown through financial health of small businesses. While loans past due rose in other credit sectors like consumer credits cards, they remained unchanged for small businesses. These present good conditions for future growth of the small business economy.”

With 14% year-over-year growth in originations, arts, entertainment and recreation remained the top expanding sector of the small business economy while administrative and waste services was the third faster growth sector (8%). Construction continues to be a growing sector (7%) as well.

Industry sectors that declined year-over-year included transportation (14%), mining (12%), agriculture (9%), healthcare (8%) and retail (1%)

The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due was unchanged in January at 1.32%. This reflects an increase of 10 basis points over last year.

One good sign of improving finances could be found in transportation delinquency, which decreased four basis points to 1.72%, its third consecutive monthly decrease. It previously had not decreased for 21 months. Agriculture delinquency increased six basis points to 0.77%, its highest level since February 2011.

“The makings of solid expansion emerge from this recent release. While one positive month could easily turn negative, this release shows the potential for a healthy future for small business credit,” Phelan said. “Rising originations, moderate loan delinquencies, rising interest rates and lower regulations mean expansion at continued low credit risk.”

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