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Lending to small firms rises in October

Dec 13, 2011 Walt Wojoiechowski

Borrowing among U.S. small businesses increased in October, reflecting general improvements in market confidence and expansion initiatives for the holiday shopping season. The Thomson Reuters/PayNet Small Business Lending Index rose 20 percent in October, marking the 15th consecutive month of double-digit growth. PayNet president William Phelan argues that the small firms' renewed expansion plans and low-risk profiles are indicative of a changing economic identity. "What we've been undergoing is a new economic order," he told Reuters. "The economy is adaptable, and it's adapted to the new reality." The underlying issue, experts agree, is capital, namely its availability for growth investment. "We've seen delinquencies improve consistently to levels that are now below risk from 2005," Phelan added, "so that lends confidence in my mind that we've got these millions of companies in the United States that now have financial capacity that didn't exist three years ago." While a number of analysts have pointed to credit decisions and conditions as key in boosting small firms' hiring and expansion efforts, improvements have not heralded noticeable improvements in the labor market.