The latest survey from PayNet Inc shows that small business loans increased significantly in April over the past year, a hopeful sign for the economy in an otherwise dismal news week.
The Thomson Reuters/PayNet Small Business Lending Index, a measure of total loan volume to small businesses, jumped up 17 percent compared with April 2010, making nine consecutive yearly double-digit gains. However, borrowing by small businesses was down 1 percent from March of this year.
“The fact that small businesses are hanging in there is a good sign for the economy,” said William Phelan. PayNet president in an interview as quoted in a Reuters article . “The data tells us they are having more of a pause than a major contraction.”
Earlier this week, it was reported that the S&P/Case-Shiller home prices index fell by 4.2 percent in the first quarter of the year.
“This month’s report is marked by confirmation of a double dip in home prices across much of the nation,” said David M. Blitzer, chairman of the index committee for Standard & Poor’s as quoted in a Wall Street Journal blog . He added, “home prices continue on their downward spiral with no relief in sight.”
More bad news included a drop in consumer confidence and a decrease in manufacturing growth in the Midwest, leading many analysts feeling pessimistic about the economy for the current quarter.
But this new report from the PayNet index may signal that things are not as bad as they seem. What’s more, in a separate study, PayNet found that more small businesses are keeping up with their loans. Small business accounts that were 30 days of more behind fell to 2.06 percent of all loans in April, which is close to pre-recession numbers. Severely delinquent loans, or those 90 days or more late, decrease to 0.64 percent, down from 0.77 percent in March.
So if small businesses are able to shoulder their loans and even increase borrowing, there must still be some hope for continued economic recovery this year.
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