Small business lending up in June

8/2/2011

While problems with the federal budget and the manufacturing sector are still showing signs of a lagging economy, small business lending may be a sign of economic revival. A recent Reuters report lists June as having the highest level of small business financing in the past three years.

The strength of small businesses is key to a recovering economy. According to the U.S. Small Business Administration, firms with less than 500 workers employ approximately half of the American workforce - almost 60 million people in 2007. As small businesses gain strength, more jobs open up for the unemployed and spending (and therefore industries across the board) may return to pre-recession strength.

The Reuters report, which analysed the Thomson Reuters/PayNet Small Business Lending Index, pointed to a 25 percent jump in lending over the same time last year. The last time small business financing was at this level was in the early days of the late-2000s recession, before the financial crisis truly took hold.

Most small businesses rely on some kind of funding to either get started or expand operations, so as lending returns to stronger numbers, the private sector should continually improve.