Small business borrowing has hit a record high in the US, as October figures predict further growth ahead.
According to data released today, the Thompson Reuters/PayNet Lending Index had a reading of 131.1 for October, the highest since the index launched in 2005, and up from 127.1 in September.
The previous record was set in January 2007 before the financial crisis, from which the nation has yet to fully recover. PayNey founder Bill Phelan, however, sees growth ahead.
“The conditions then were so much different than they are today,” Phelan told Reuters, pointing out that loan delinquencies had been rising steadily in the months before the January 2007 borrowing peak, reaching 2.5 per cent of all loans.
In October 2014, however, delinquencies fell to 1.56 per cent from 1.57 per cent the previous month, indicating that borrowers are taking fewer risks with their money.
But concerns still linger over the health of the labour market, and subdued inflation means the central bank is likely to keep interest rates near zero until the middle of next year. But US economy registered its fastest growth in a decade last quarter, which is good news all round, especially for small businesses.
PayNet collects real-time loan information such as originations and delinquencies from more than 250 leading U.S. lenders.