Authored by Phil Cohen
Despite the federal government shutdown, economic growth among small businesses has been promising. This October, small businesses in the U.S. accelerated borrowing to the highest level in over six years, according to an index released earlier this week.
The Thomson Reuters/PayNet Small Business Lending Index serves as a key indicator measuring the volume of financing provided to small businesses. PayNet recently reported that the index reached 120.4 in October, which was the highest registered level reached since August 2007. In comparison, the index came in at a reading of 109.9 back in September of this year.
Typically, PayNet’s lending index has been directly linked to economic growth projections for one or two quarters in the future. Loans are usually acquired by small businesses when they plan on purchasing new tools, factories and equipment. Therefore, more borrowing can be a promising indicator of increased hiring in the future.
Regardless, the Federal Reserve is keeping a close watch on the future of the job market. Federal Reserve Chairman Ben Bernanke said he wants to see more evidence supporting a strengthening labor market before deciding whether or not to cut back on the Fed’s enormous bond-buying stimulus program.
Although the Feds are scheduled to meet in two weeks to debate the policy, several economists believe that bankers won’t start cutting down on bond buys until 2014. Nevertheless, as financial stress on small businesses continues to decrease, many business owners are able to pay off their loans on time. This measure could also be a good sign for the future of small business borrowing.
As small business borrowing continues to increase, some business owners may be searching for alternative financing methods to help accelerate company cash flow. Instead of waiting 30 to 90 days to receive loan approval from a lending institution, small business factoring can help your business acquire immediate cash advances. No matter what your credit situation is like, small business factoring is the smart alternative to bank loans. Based solely on the credit of your customers, small business factoring can help your firm reduce expenses and eliminate bad debt. So, why wait? Apply today to help your small business grow.