March 12, 2018

By Bob Coleman
Editor, Main Street Monday

Main Street Monday — Small Business Lending Nears All-Time High

“After years of sluggishness, small businesses are finally getting back in the game and increasing their capacity,” says Bill Phelan, president of PayNet, Inc. “It’s good to see Main Street more involved in the expansion, as small businesses appear to be going ‘all-in,’ investing in more property, plant and equipment tools and services.”

The Thomson Reuters / PayNet Small Business Lending Index increased to 143.6 in January, nearing the all-time high reached in July 2015. The SBLI is up nearly five points compared to last month and is 14% above year-ago levels.

“The economy continues to perform well, and the combination of a lower tax burden and lighter-touch regulation should help keep it rolling in 2018,” adds Bill. “We fully expect banks to increase their lending activity to small commercial and industrial business in the months ahead.”

As the economy continues to accelerate, small businesses are showing slight increases in financial stress. The Thomson Reuters / PayNet Small Business Delinquency Index 31–90 Days Past Due inched up to 1.38% in January and is up five basis points over the last 12 months.

Thomson Reuters/PayNet Small Business Lending Index (SBLI)

The Small Business Lending Index (SBLI) is based on new commercial loan and lease originations by major U.S. lenders in PayNet’s proprietary database. This index measures the volume of loans to small businesses normalized to January 2005. Small businesses generally respond to changes in economic conditions more rapidly than do larger businesses, so this statistic is a leading indicator of the economy and predicts changes in GDP between 2-5 months.

Thomson Reuters/PayNet Small Business Delinquency Index (SBDI)

The Small Business Delinquency Index (SBDI) measures the financial stress of small businesses with $1mm or less in credit outstanding.