July 2, 2012
NEW YORK (AP) -- Lending to small businesses is recovering after a four-month decline.
A study released Monday by PayNet, a research firm that tracks loans to small business, shows that lending rose 12 percent in May from April's levels. That's the largest increase since June 2009, when the economy was pulling out of the recession.
The Thomson Reuters/PayNet Small Business Lending Index rose to 108.4 in May from April's 96.6. That takes it close to the 110.5 the index registered in December, before a four-month slide began.
William Phelan, president of PayNet, said the increase shows that small business owners are feeling more confident. But he said the higher reading could also be a blip rather than the start of a trend. Many are still uneasy about the economy and remain reserved with their spending for both new equipment and hiring, he said.
"We expect to see steady and cautious expansion by small businesses if we avoid external shocks such as another credit crisis," Phelan said.
The small business optimism index compiled by the National Federation of Independent Business has fluctuated modestly since March and remains about where it stood in February of last year.
The first critical reading about how confident businesses felt last month across the economy arrives Friday when the Labor Department releases its jobs report.
Economists expect small business owners to put off aggressive action until after the presidential and congressional elections in November.
PayNet bases its index on new commercial loans and leases granted to small businesses in its database.