Small Businesses Now Borrowing Slightly More

Over the past several years, since the onset of the recession, many small business owners have reported significant difficulties in obtaining loan approvals from lenders. And while that trend is still largely in place, it seems standards are easing somewhat, as slightly more entrepreneurs have received approval for their loan requests.

The Thomson Reuters/PayNet Small Business Lending Index ticked up 4 percent on an annual basis to a reading of 117.2 in January, according to a report from Reuters. However, it’s important to note that this level was down slightly from the number seen in December, when such lending hit a high not seen in seven years. Nonetheless, it’s generally agreed that the way in which winter weather pummeled many parts of the country in January should have had a potentially larger impact on lending on a monthly basis than it did, and as such even the slight decline from December is a step in the right direction.

“It was unexciting growth but it was growth nonetheless,” PayNet founder Bill Phelan told the news agency.

In fact, that winter weather seems to have led to declining sales figures, production, and more, and nonetheless, small business owners continued to seek loans at a rate comparable with that recent high set in the final month of last year, the report said. On the other hand, data shows that the American economy grew roughly 2.4 percent over the final quarter of the year, and that’s actually down from previous estimates.

Businesses better at paying the bills
At the same time, small business lenders had to be encouraged by the fact that such companies continue to cut their delinquency rates, the report said. Late payments of between 31 and 180 days made up just 1.45 percent of all outstanding loan balances in January, down from 1.46 percent in December. That’s still slightly above the all-time low of 1.44 percent seen in October, but well below the high of 4.73 percent from August 2009.

Owners worried about their ability to enjoy some amount of financial flexibility might want to consider alternatives to seeking new lending, such as by cutting costs for their current small business insurance policies. Finding more affordable commercial insurance or other such plans could end up saving them thousands of dollars per year that could then be devoted to other areas of need.