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PayNet: U.S. Small Business Treading Water

November 08, 2017, 07:08 AM
Filed Under: Economy

Small business monthly credit trends reflect a wait and see attitude. The September 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) decreased 4% to 127.3 from 133.2 in August 2017.  Compared to September 2016, the SBLI decreased 2%.

Only four major sectors registered positive increases with Accommodation & Food, Administration, Construction and Wholesale up materially. In a positive sign, Health Care, Retail and Transportation are showing increased investment over the past quarter which bodes well for these sectors.

“While the majority of industry sectors showed decreases compared to last year, the overall trend line remains unchanged, indicating this wait and see attitude among small businesses,” states William Phelan, president of PayNet, Inc.  “Financial health continues at above average quality. Small businesses are not venturing out on a financial limb at this time.”

The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due increased to 1.35% in September 2017 from 1.33% in August 2017.  Compared to one year ago, delinquency increased 3 basis points (bps). Every month in the past year and a half has been up, however the year-over-year increase had been declining for the last five months, whereas this month it has increased slightly.

Transportation and Agriculture delinquency decreased 7 bps and 2 bps while investment in these two sectors are finally starting to creep into positive territory. The remaining segments showed delinquency increases of 1 to 2 bps.

The PayNet Small Business Default Index (SBDFI) ticked up one basis point in September to 1.86%, and there are signs that the negative impact of Hurricane Harvey is starting to materialize.  After many months of relatively rapid declines in default rates, defaults ticked up in the Western Part of the South—and especially Texas which increased from 2.91% to 2.96%—last month.

“Small business is not in expansionary mode probably because they are not sure about the direction of important policies like taxes. It’s going to take some serious clarity to get small business to come to life again and start to invest,” Phelan added.

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