Mixed signals for small business lending

10/17/2011

Small business lending has yet to fully reach pre-recession levels, but recent data from PayNet shows that certain sectors are seeing substantial increases, Reuters reports.

The news source notes that the amusement and recreation sectors, such as bars, restaurants and travel-related services, created the greatest amount of new business in 2010, which PayNet founder William Phelan believes is a result of people "just enjoying themselves more."

PayNet also forecasts startups will begin to garner more capital by 2012. The risk management tool suggests that between 200,000 and 300,000 new businesses will be created this year, a result of less business failures.

"We're finally turning the corner," Phelan told the news source. "We're starting to see net new startups emerge. Jobs will eventually come from those startups."

However, the Small Business Administration's Quarterly Lending Bulletin revealed that businesses have also been slower to pay their outstanding loan balances. A Q2 analysis found that small companies had $607 billion in outstanding loans, and are paying them back at a rate of 0.4 percent - the slowest pace since 2008.