Main Street Monday — Small Business Loan Delinquencies Tick Up

December 19, 2016

By Bob Coleman
Editor, Main Street Monday

Main Street Monday — Small Business Loan Delinquencies Tick Up

Loans more than 30 days past due rose in October to 1.68 percent, the seventh straight monthly increase and the highest delinquency rate since November 2012.

PayNet CEO and founder Bill Phelan sees a glass half full in the numbers, noting that a delinquency of 2 percent or higher was the norm for most of the pre-crisis era when the lending index was at a similar level.

Now that the U.S. presidential election is over, Phelan says, “we are getting more clarity” on the direction of policy, a positive point for small business. A reduction in uncertainty will remove some of the funk.”

Borrowing also slipped in October to the lowest level since January.

The Thomson Reuters/PayNet Small Business Lending Index fell to 121.3 from a downwardly revised 128.8 in September. Measured from a year earlier, it was the fifth straight monthly decline, with the index at its lowest point since January.

Movements in the index typically correspond with movements in gross domestic product growth a quarter or two ahead. Economic growth in the United States sped up in the third quarter to a 3.2 percent pace, data released this week showed.

PayNet collects real-time loan information such as originations and delinquencies from more than 325 leading U.S. lenders.