Growth of Small Business Lending

Dec. 15, 2011 - PRLog -- During the recession, small businesses adapted to the difficult economic times and are now willing to use lower-risk Business Loans and Merchant Cash Advances in order to receive capital to expand their business.

Small business borrowing is on the rise, with many businesses expanding, incorporating technology to enhancement efficiency and outsourcing.

According to the Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small businesses, lending jumped 20 percent in October. It was the 15th month of double-digit growth.

While the markets may be unstable, there is an underlying strength in the U.S. economy that is not being reported by stock market indices.The reason we are not seeing this profitability reported is due to the fact that these businesses are privately owned companies.

According to most analysts, the U.S. gross domestic product will likely be stronger over the next two to five months, based on the growth of small business lending. Small businesses are in better fiscal shape then in 2005, prior to the recession, with considerable improvement in risk profile.

Banks are actively looking for earning assets, small business offer an opportunity to diversify their loan portfolios.

Agriculture, manufacturing and construction businesses are gaining traction, and equipment producers for these industries are benefitting from the new investment.

Businesses that are borrowing now are making a four-year wager, and would not be making that gamble without definitive signs of consumer demand. The cost of doing business has risen, and the Business Loan industry is closely observing federal tax policy and other regulatory changes that could negatively affect momentum.

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