More Small Business Lending Under Way, Showing Growth Potential

Millions of small business owners nationwide have recently seen significant economic improvements that have put them in a better position to increase the size of their companies, and that trend was, perhaps not surprisingly, reflected once again in the uptick in lending to these entrepreneurs across the country.

The amount of financing extended to the nation's independent companies rose some 9 percent on an annual basis, as well as spiking significantly from April's totals, according to the latest Thomson Reuters/PayNet Small Business Lending Index for May. In all, the rating climbed to 115.1 from Aprils 108.1 rating, and is now close to the 116 level observed in the final month of last year. In general, a rating above 100 shows positive movements in the sector.

"Small businesses are avoiding stall, and it means that there's a slow expansion that's in place," PayNet president Bill Phelan told the news organization.

In general, these loans are taken out as a means of purchasing new equipment or expand building size, and are also seen as a potential sign of companies increasing their hiring as well, the report said. Usually, the steps forward seen in small business lending are reflected between three and six months down the road in the form of economic improvements, and those could be further buoyed by the Federal Reserve Board's bond-buying efforts, designed to keep interest rates as low as possible. 

Delinquency on small business loans continues to fall as well
Another sign that small businesses are generally doing better in managing their finances overall is that existing loans to them are receiving more on-time payments, the report said. The Thomson Reuters/PayNet Small Business Delinquency Index slipped once again in May, as just 1.49 percent of all loans were between 31 and 180 days behind on payments, an all-time low. That's down from 1.54 percent in April, and the rate has been falling more or less steadily since reaching its all-time high of 4.73 percent in August 2009.

As the economy continues to improve, many small business owners across the country will likely see their prospects for expansion, whether it's simply in the reach their companies have in their local communities or in their abilities to bring on additional workers, make similar steps forward. Smaller companies hire the majority of workers nationwide and better feeling among owners is likely a strong indicator of the direction in which the national economy is moving.

Of course, owners of small businesses likely have a lot to consider when they want to begin expansion efforts, and this is a process that should not be entered into lightly. Taking the time to do all the math and make sure such a decision is a wise one at the present time is likely going to spell the difference between a company's success and failure. Often, a great way for companies to improve their financial capabilities is to make sure they're not paying more than they need to for small business insurance policies that are typically necessary for these enterprises to run smoothly.

Looking into whether policies such as those for general liability insurance or workers' compensation insurance can be found for lower monthly or annual costs may help to shore up a company's finances, as these often come with sizable price tags and finding ways to reduce them, even marginally, may be a significant boon to owners' bottom lines overall. Exploring all available options will therefore help to improve an owner's understanding of what is available and how much they should be paying for coverage.