Data Finds SME Lending Dropped Again

The roller coaster ride of small business lending has changed course again. According to PayNet data released Tuesday (March 3), SMEs slowed their lending down in January compared with the month prior.

Data released in the PayNet Small Business Lending Index fell to 120.9 in January, down from December’s record level of 133.5. Reports say December 2014’s numbers were the highest since PayNet began publishing the index in January of 2005.

But according to PayNet founder Bill Phelan, despite the dip, January’s index was up 3 percent compared with January of 2013, suggesting the economy is “still on track with continued expansion.”

Phelan added that part of the lending drop can be attributed to extreme cold in much of the U.S., and companies were largely absorbing costs from major investments made last year, slowing investment in small business.

Reports say that historically, PayNet’s data have correlated with the nation’s gross domestic product growth up to five months ahead.

While experts did not find the latest numbers too concerning, a separate PayNet study released found a rise in small business loan repayment delinquencies, hitting 1.54 percent. The SME commercial financial analyst released similar findings last month regarding Canada’s small business market, also finding an uptick in delinquencies.

Earlier data from Biz2Credit offer additional insight into the SME space. Research found that big banks approved small business loan applications more frequently in January than they did the month prior. Those results followed a separate survey by American Banker that declared lower small business lending rates last November, a trend the banks attributed to falling SME loan demand.

As the numbers rise and fall for small business financing, the market recently revealed a new entrant. Staples announced last month that it would enter the SME lending industry following its merger with Office Depot and sinking office supply demand.