C-Suite Wednesday— Small Business Lending Activity on a Bumpy Road to Recovery

December 23, 2020

Caity Roach

C-Suite Wednesday— Small Business Lending Activity on a Bumpy Road to Recovery

While small business lending activity rose moderately in October (1.7% M/M), preliminary November data collected by PayNet suggests a bumpy road ahead for Main Street as COVID-19 cases rise once again. Although overall unemployment claims continue to decline, new restrictions have caused small business closure rates to reach their highest level since May. Nevertheless, small business owners remain cautiously optimistic as uncertainty caused by the presidential election declines, and the prospect of a widely available vaccine increases.

Here are some of the key findings from PayNet’s December issue of Strategic Insights:

  • In October, the PayNet Small Business Lending Index (SBLI) showed a 1.7% increase in lending activity month over month. However, it remained 0.9% below its October 2019 level.
  • Lending activity increased in eight of the ten largest states in October. Modest improvements were seen in both North Carolina (1.1% M/M) and Illinois (1.0% M/M). Regardless, lending declined for the eighth straight month in New York (down 1.6% M/M) and the tenth straight month in Texas (down 0.3% M/M).
  • In October, lending activity notably improved in Wholesale Trade (0.7% M/M) and Mining (1.8% M/M). Meanwhile, large decreases were seen in Accommodation & Food Services (down 4.7% M/M); Arts, Entertainment, & Recreation ( down 5.0% M/M); Finance and Insurance (down1.8% M/M); and Information (down 2.2% M/M).
  • Delinquency rates decreased for the fifth-straight month in October, falling 9 basis points but remaining 5 basis points above October 2019 levels.
  • Although delinquency rates fell in every major industry in October, Health Care and Transportation experienced the largest declines. 

Click here to read PayNet’s full report.