Over the last few years, small businesses have had difficulty finding access to credit that can help make their companies grow. And while that trend hasn’t been as prevalent recently, there was a bit of a slowdown in demand for loans during the month of November.
The amount of small business lending over the course of November hit the lowest level seen in eight months, according to the latest Thomson Reuters/PayNet Small Business Lending Index. In all, the index slipped to a reading of just 116, down significantly from October’s level of 129.7, as well as the pre-recession high of 131.7, seen in Jan. 2007.
However, it should also be noted that the most recent level, while down month-over-month, still showed a 1 percent improvement on an annual basis, the report said. Further, experts generally don’t see this recent downturn as an indicator of more difficulty to come, or a loss of interest. In fact, it could be a positive considering the potentially unsustainable size of the gains made during the last several months. The economy is only likely to keep improving in the coming months, meaning that owners will probably continue to turn an eye toward expansion, and consequently seek out more financing.
“We don’t see this as a sea change or an inflection point,” said PayNet founder Bill Phelan, noting that the index rose by double digits for most of the year. “This is a pause more than anything and it’s probably pretty healthy.”
Companies still doing good job with paying bills
Meanwhile, it seems that there’s been relatively little change in entrepreneurs’ ability to meet their monthly obligations on time, the report said. The delinquency rate on small business loans remained unchanged for the month at 1.56 percent. And this may be a positive sign, because it’s a very low number and because the rate at which these loans have been taken on over the last year or so has picked up appreciably.
Owners who want to position their companies for financial success going forward might want to look into the ways in which their enterprises spend money. If they can cut costs for small business insurance, including policies for liability insurance, they may be able to save thousands of dollars annually that can be put toward improving other aspects of their bottom lines, and potentially qualifying them for more financing.