Small Business Lending Index Takes a Fall in May



The Thomson Reuters/PayNet Small Business Lending Index decreased by 8% in May, falling from to 128.5 from the 140 mark it reached in April.

However, the fall is not necessarily indicative of trouble on the horizon. Compared to the same month one year ago, the SBLI is still up 3% and trend line growth increased 9% in comparison to the same period a year ago, keeping intact the expansion trend that has now been in place for 26 months.

The decline can largely be accredited to the pausing of investing activities by small businesses after several months of increased growth.

“Small business took a breather last month after the high levels of investment over the prior quarter. This release isn’t surprising given the challenges building new property, plant and equipment,” said William Phelan, president of PayNet.

Industries that have shown the most expansion are transportation and warehousing (24%), as well as construction (11%). Regionally, Pennsylvania (12%), Georgia (11%) and Florida (7%) showed the largest increases in borrowing and investment among small businesses.

In addition to the SBLI, the Small Business Delinquency Index increased one basis point from 1.23% in April to 1.24% in May, with transportation and retail delinquencies reaching all-time lows of 0.21% and 0.28%, respectively.

“Given the torrid pace of investment in February through April this year, a pause was in order for small business investment. Conditions such as increased hiring, increased compensation, higher inventories, and easier access to credit will follow in those industry groups showing the best performance,” Phelan said.


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