Good news for small business factoring customers in every industry: Just this May, small business lending rose to its highest level of the year so far, likely indicating a wave of economic growth in the coming year.
Thomson Reuters, in conjunction with PayNet, put out their Small Business Lending Index. Their measurement is critical for several reasons:
- It rose significantly to 108.4 from April’s 96.6, a sudden gain that reversed a steady decline from the previous four months.
- Part of the spike in the Small Business Lending Index was the result of an 18 percent jump in small business lending from May of 2011.
- Finally, the small business borrowing index has long been an indicator of economic growth.
U.S. Federal Reserve officials have already slashed the costs of lending as a result of this increase. According to Reuters, these rates will stay right around zero until 2014 at the very least. What remains to be seen is whether or not more stimulus capital will be needed to sustain the growth that small business lending has enjoyed as of late.
Our factoring blog readers should take note of PayNet’s findings, especially in their measurements of the recent decline in delinquent accounts receivable:
- The percentage of accounts receivable that were delinquent in payment by 30 days or more fell from 1.28% in April to 1.18% the following month.
- Accounts delinquent by 90 days or more fell from .34% to 0.29%.
- Accounts that were overdue by 180 days or more decreased from 0.44% to .40%.
This is all good news for all business owners, as they will be likelier to receive cash from customers at a faster rate than in previous months.
