One of the biggest obstacles many small businesses have faced in recent years is that when they want to expand – such as by hiring more workers, investing in new equipment, or moving to a bigger space – they have simply not been able to obtain the credit often necessary to do so. And while that trend has been slowly going away over the past year or so, it once again reared its head in the month of February.
The amount of borrowing by independent enterprises nationwide fell to a reading of just 110.5 in February, continuing the trend of declines seen since the start of the new year, according to the latest Thomson Reuters/PayNet Small Business Lending Index. That’s down considerably from the 116.5 seen a month earlier, and many experts say that the reason for this drop is that the harsh winter weather had a negative impact on many small businesses’ bottom lines, putting revenues significantly off course and potentially making them less optimistic about their chances for success in the future.
In all, growth of the gross domestic product slowed to only about 2 percent in the first quarter of the year, but it’s believed it will pick up again as the weather improves, the report said. This latest drop came after it actually grew over the final three months of last year, to 2.6 percent. Other factors such as employment growth, industrial production, and retail figures are expected to rise significantly as spring arrives.
“Small business investment expansion signals moderate GDP growth,” said PayNet founder Bill Phelan.
Companies doing better with these balances
When it comes to the credit health of most small business loans in the country, the improvement seen between January and February was minimal, but it remained strong overall, the report said. In all, just 1.48 percent of all such loans were between 31 and 180 days behind on payments, near the record low of 1.44 percent set last October, and significantly better than August 2009’s all-time high of 4.73 percent.
Small business owners who want to shore up their companies’ bottom lines might want to consider the ways in which they currently spend on all kinds of expenses. For instance, by seeking out more affordable small business insurance policies – including liability insurance – companies might be able to cut thousands of dollars from their budgets.