US Small Businesses Increase Borrowing for Their Businesses

According to the PayNet, the small businesses in U.S have increased their rate of borrowing in September, indicating that the economy is expecting the recovery soon. This up trend in borrowing is seen as a welcoming change as this was seen even before the introduction of monetary stimulus by Federal Reserve bank. This situation of increased lending is supposed to have a positive effect on the whole U.S economy due to the fact that small businesses constitute for 80% of total hiring in U.S.

The Small Business Lending Index given by Thomson Reuters and payNet had measured the volume of financing all across the U.S and found that the index rose 16% in September (15% in August) from the previous year.

The current U.S economy is facing problems of low inflation and unemployment.Fed Policy makers are finding it hard due to low inflation level which is around 1% (2% is fond to be a healthy inflation rate). One in ten persons of the total U.S. employable population is out of a job.

While the borrowing saw a surge, the data reveals the statistics of delinquency also. Accounts in moderate delinquency (behind by 30 days or more), fell to 2.65 percent in September (lowest since mid-2007) from 2.81 percent in August. Accounts in severe delinquency (90 days or more), fell to 0.76 percent in September from 0.85 percent in August. Accounts that are in default or unlikely to get paid ever (behind 180 days or more), fell in September to 0.81 percent of total receivables from 0.84 percent in August. On the whole, it was found that there were only few companies which were falling behind on payment of existing loans.