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U.S. Small Business Investment Rises, Private Company Growth Turns Positive

July 11, 2017, 07:00 AM
Filed Under: Economy

The May 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) increased to 137.0, up 9% from 125.4 in April 2017. Compared to May 2016, the SBLI is up 3% and it is at the highest level since June 2016.

“Expansion by small businesses in May brings positive news,” states William Phelan, president of PayNet.  “It’s good to see some growth finally out of the private companies, after decreases for 9 of the last 13 months”

Consumer oriented sectors have been the primary growth drivers, with Accommodation and Food Services up (2%) and Arts, Entertainment, and Recreation up (11%).

Borrowing in Healthcare has been experiencing negative investment growth (-13%) while Transportation pullback is actually lessening, although originations declined (-14%).

Small business financial health improved slightly.  The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due decreased to 1.34% in May 2017 from 1.36% in April 2017. Compared to May 2016, delinquency increased 8%, equivalent to 10 bps.

Within the industry sectors, Health Care showed a 4 bp decrease in delinquency and General Industries showed a 3 bp decrease while Agriculture and Construction showed 2 bp increases and Transportation showed a 9 bp increase in delinquency.

Default rates remain quite well behaved across most geographies and sectors based on the PayNet Small Business Default Index. The national default rate of 1.9% is still 34% below 2005-06 averages, and the rate of increase continues to moderate.

“Small businesses still have untapped potential and capability to invest,” Phelan added.  “But more uncertainty means negligible growth from private companies for the next quarter.”

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