Lending remains turbulent among small businesses

Jessica SarterSmall Business Lending

Small business lending has fluctuated throughout 2012, with strong performances seen in the late months of summer and a certain level of contractions thus far in the fall. Entrepreneurs often list accessibility of credit as the single most important component of sustaining their businesses and expanding operations.

As small businesses make up a disproportionate rate of employment prospects, gross domestic product (GDP) and patent awards, the nation’s banks and federal agencies have been increasing efforts to disburse more loans. Though the U.S. Small Business Administration backed nearly record-volumes of commercial loans in its latest fiscal quarter, the efforts might be falling short.

Index shows decreases in supply, demand
Reuters recently reported that the Thomson Reuters/PayNet Small Business Lending Index dropped to its lowest number in more than a year in September. According to the news provider, the index decreased more than 10 points, from 108.9 in August to 94.1 in September, which the study’s authors believe creates a grim forecast for the coming months.

The source added that the index most often indicates what economic conditions will look like roughly two months down the road. The last round of estimates by PayNet found several causes for concern, including increases to accounts overdue. While the firm found that long-term and default accounts past due decreased, the number of payments overdue by 30 days or less rose from 1.18 percent in August to 1.24 percent in September.

This information coincided with the continued easing of lending terms by the Federal Reserve, which boded poorly for the economy, Reuters added. However, as many reports on lending conditions tend to fluctuate, the accurate picture is more difficult to find.

SBA loans still looking good
The Herald recently reported that the SBA’s 504 loan program has remained a strong option for small business borrowers. According to the news provider, 504 commercial real estate loans have seen the lowest interest rates in history for several months now, and the terms continue to become more feasible for most entrepreneurs.

The source added that this is the seventh time this year that interest rates on the SBA’s loan program fell.

No matter what the economic climate is, small business owners can improve their chances of acquiring the loans they need by using BoeFly. This firm uses complex algorithms to connect borrowers with one or more of its thousands of participating lenders, all with one loan application.