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PayNet: U.S. Small Business Hasn’t Turned the Corner

October 06, 2017, 07:09 AM
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The August 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) increased 8% to 134.2 in August 2017 from 123.8 in July 2017. Compared to August 2016, the SBLI increased 1%.

Top growth sectors driving investment expansion by small businesses are found in the Construction (+5.6%) and Accommodation & Food Services (+5.9%) businesses which together represent over 13% of the small business economy. Arts, Entertainment & Recreation (+10.0%) remains the top growing sector among small businesses. In a big turnaround, Mining (+3.2%) and Wholesale Trade (+3.0%) are now both positive for the first time in the last several years.

“Small business originations growth and delinquency continue to show a mixed bag,” states William Phelan, president of PayNet, Inc.
After many months of double-digit contractions, growth in the Health Care sector has stabilized dramatically, and has been slightly positive in recent months with a 0.2% increase.

The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due decreased to 1.33% in August 2017 from 1.35% in July 2017. Compared to one year ago, delinquency increased by 1 bp.

Transportation showed a 10 bp decrease in delinquency. Increases in delinquency are shown in both Agriculture (2 bps) and Construction (1 bp).

The PayNet Small Business Default Index (SBDFI) at 1.84% is 35% below pre-crisis readings, and has been receding in recent months. Much of the improvement in recent months has come from two formerly high-risk sectors experiencing improvements in default rates. Mining default rates have declined close to 1%-point over the last year, and Transportation default rates have been declining at a 0.6% annualized rate over the last three months.

“Conditions are in place for small businesses to drive GDP growth resulting from exceptional financial health,” Phelan added.

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