October 21, 2020
C-Suite Wednesday — Small Business Lending Falls as Economic Recovery Slows
For the first time since April, PayNet’s Small Business Lending Index declined 13.5 points (-9.1%) to 134.7 in August, signaling that the summer small business lending surge caused by PPP may be slowing down. Despite the drop, small business lending activity remains only slightly below 2019’s levels.
Here are the other key findings from PayNet’s October issue of Strategic Insights:
- The largest decline in small business lending activity month over month occurred in Pennsylvania (-1.7%), Ohio (-1.1%), and New York (-1.0%) while the largest increase in lending activity was recorded in Illinois (+0.7%) and North Carolina (+0.1%).
- Lending activity improved in 5 out of 18 of the industries that are regularly analyzed by PayNet with the largest improvements month over month in Public Administration (+1.2%) and Construction (+1.0%). Lending activity continues to decline in information (-5.0%), education (-5.9%) and mining (-5.6%).
- Overall, small business loan defaults have increased 96 basis points on PayNet’s Small Business Delinquency Index since February, with the most recent reading at 3.26%. Small business delinquency for loans 31–90 days past due has begun to improve but is still 37 basis points above last year’s level. Loans 91-180 days past due remain statistically the same as the previous month’s reading at 23 basis points above last year’s level.
- Although delinquency rates fell in every major industry last month, transportation (-25 basis points) and construction (-20 basis points) saw the steepest decline and are now well below their August 2019 levels. However, delinquencies are up year over year in retail (+102 basis points) and health care (+91 basis points).
Click here to read PayNet’s full report.
Join the Coleman Report Live daily show on Wednesday, October 21, 2020, at 1:00 PM Eastern for more insights from William Phelan, co-founder of PayNet.