Market Overview

U.S. Small Business Borrowing Jumps on Anticipation of Growth

Small business borrowing in the United States jumped considerably in May, suggesting that economic growth may again be on the horizon as businesses invest in capital and employees.

The Thomson Reuters/PayNet Small Business Lending Index, an indication of the overall volume of financing to U.S. small businesses, reported a rise of 26% in May from a year earlier. The Index now stands at its highest level since July, 2008.

The news is welcomed by many market analysts, as small business borrowing is seen as a significant means of investment in the labor force. Additionally, any capital investments benefit the supply chain that produces a new purchase.

PayNet founder Bill Phelan said in an interview with Reuters that he was optimistic.

"If small businesses are taking these kind of chances, taking risks, making long term investments, they are seeing some long-term opportunities on the horizon. That's got to be a big positive sign for the economy."

The Federal Reserve has kept interest rates at record lows in an attempt to promote economic growth. The global financial system has taken longer to recover from the meltdown of 2008 than many market watchers had forecast.

Elsewhere, a Reuters report notes that "Separate data also released on Thursday showed small business loan defaults at their lowest in five years, tying records set in April and May 2006."

Posted-In: Reuters small businessNews Small Business

 

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