Survey Shows a Decline in September Small Business Borrowing

The Thomson Reuters/PayNet Small Business Lending Index for September was released recently, showing that small business lending dropped sharply in September. The Lending Circle, which helps small business and borrowers with lending needs, highlights this data and the challenges small business face today. Other reports released recently paint a different picture, but it is thought that the direction of the economy may not become clear until the lame duck period passes and looming fiscal cliff issues are addressed.

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The Lending Circle, a Division of Sunovis Financial

A lack of confidence in the overall economy was cited as one of the main reasons borrowing dropped in September.

San Francisco, CA (PRWEB) November 16, 2012

Based on data from the recently released Thomson Reuters/PayNet Small Business Lending index small business owners took a break from borrowing in September.

A lack of confidence in the overall economy was cited as one of the main reasons borrowing dropped in September. The index shows a 14 percent drop in small business lending for September, offsetting small gains from July and August. On a year over year basis, small business lending was basically flat according to the survey.

The index is based on data provided by PayNet Inc., and measures the volume of new loan origination to small businesses. The index is normalized to a value of 100 in January 2005. The September index value was 94.1, a sharp drop from the 108.9 reading in August. Thomson Reuters claims the index has a high correlation with GDP change as a leading indicator, with a 2-5 month lead on GDP change.

The report comes at the same time as a report from ADP, a payroll services firm, which shows that small business were hesitant to hire in October. As The Lending Circle, a division of Sunovis Financial, has reported over the past several weeks, many recent reports and surveys are showing small business owners to be very conservative in hiring and capital expenditures. This conservative stance is being caused by uncertainty over the presidential elections, weakness in the economy, falling sales volume, and the looming fiscal cliff in America.

While the Thomson Reuters survey indicates pessimism, not all of the economic news has been dire. The Institute for Supply Management released a report showing an increase in manufacturing growth for two straight months (September and October). The report shows an increase in new orders, a positive sign for growth in the coming months.

Considering the looming fiscal cliff and lame duck period in Congress, it is unsurprising to see that small business owners are waiting on the sidelines. A resolution to both of these issues is likely to remove much of the current uncertainty that seems to pervade business, both small and large.

About The Lending Tree
The Lending Circle, a division of Sunovis Financial, works to address the great pent-up need for financing nationwide, and assists small business and borrowers with lending needs, including short term business loans, conventional financing and refinancing, SBA loans, and alternative lending.


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