Small business lending edged down in April, even though it remains near historic highs, according to the latest Strategic Insights Report from PayNet, a provider of small business credit data and analysis.
The Thomson Reuters / PayNet Small Business Lending Index (SBLI) fell 3.5 points to 141.7 in April, but remains in the top 5 percent of all readings and is up nearly 13 percent over the last 12 months. The SBLI 3-month moving average also declined slightly but is still 11 percent above its year-ago level.
“We’ve seen small business lending really start to take off this year, and we don’t see things slowing down anytime soon,” said William Phelan, president of PayNet, Inc. “Main Street businesses are taking advantage of the strong economic climate and steady consumer demand, so we expect that robust lending to small businesses will continue as they look to expand by investing in equipment, employees, and innovation.”
Also, Small business financial stress eased in April, reversing the trend of steady increases in recent months.
North Carolina was one of only two large states (Michigan the other) which saw past delinquency rates lower than a year ago, although they declined for all ten of the largest states.
Meanwhile, defaults in the Information industry continued to climb (+92bp Y/Y), reaching the highest level in nearly six years.
“Part of the strength in the current small business lending boom is that although credit risk is slowly rising, it remains quite low in most industries,” added Phelan. “Over the next year or two, we expect delinquencies and defaults to continue to tick up and return to more normal levels. But for now, the small business sector has the wind at its back, which should provide a big lift to US GDP over the next 2-5 months.”
