Small Business Bank Lending is Down

The invoice factoring specialists from PRN Funding came across an interesting article on CNBC’s web site, entitled: Small Biz Lending Shrinks as Owners Grow Cautious. In a nutshell, there are a number of reports recently conducted involving small business lending, and they all point to one thing–Small businesses are still uncomfortable with adding debt to their balance sheets and/or hiring new personnel.

We have summarized some of the key takeaways from the article with the cash flow professionals and small business owners that consistently read The Factoring Blog:

  • PayNet (a research firm that tracks loans to small companies) released a report on Friday showing that lending fell 2% in April, which was after a 3% dip in March.
  • Thomson Reuters/PayNet Small Business Lending Index fell to 94.1 in April. It was at 110.5 in December.
  • ADP (payroll processing company) said the pace of hiring by the smallest businesses, those with fewer than 50 employees, slowed in May.
  • Both ADP’s report and PayNet’s report had similar¬† findings, in that both reports showed that small business owners are increasingly reluctant to hire or expand in this uncertain economy. (The monthly survey of small business owners by the National Federation of Independent Business also echoed this finding.)
  • Dun & Bradstreet Credibility Corp. (a credit reporting service for businesses), also had some interesting findings after it surveyed 6000 companies during Q1. Mainly that , 64% of businesses with revenue under $5 million said that lack of financing has made it difficult for them to grow. Furthermore, 55% said that it was also restricting their hiring plans.
  • Dun & Bradstreet also reported that banks are becoming more stringent in their lending requirements for small businesses.

Note from the invoice funding specialists at PRN Funding:

Even though small business loans seems to be trending down, there are still a number of great alternative financing methods available to small business owners. Accounts receivable invoice factoring is a great way for business owners to increase their cash flow without creating additional debt.