Small Business Insights - August 2020

Because small businesses generally respond to changes in economic conditions more rapidly than larger businesses, the PayNet Small Business Indices serve as a leading indicator of macroeconomic and industry trends.

The Small Business Lending Index (SBLI) measures the volume of small business loans issued over the past 30 days and is based on the most recent data from the largest commercial and industrial lenders in the PayNet U.S. database, including both loans and leases.

According to the latest data, the PayNet Small Business Lending Index (SBLI) seasonally adjusted originations increased 14% from 116.1 in May 2020 to 132.1 in June 2020. Though the index increased it is still below pre-COVID levels. Compared to the same month one year ago, the index is down 4%. The rolling three-month index at 119.6 is down 21% compared to one year ago, but up 3% compared to one month ago, which was the lowest point since early 2014.

The Small Business Delinquency Index (SBDI) is designed to gauge small business financial stress and default risk at the national and state levels, including industry segmentation. The SBDI is designed to provide the insight that financial services executives, economists, policy makers and regulators need to understand the stage of the business cycle and to set credit oversight policies.

The PayNet Small Business Delinquency Index (SBDI) decreased 11 basis points (bps) from 2.36% in May 2020 to 2.25% in June 2020. The level of the index is similar to 2010 levels. As compared to one year ago, delinquency increased by 71 bps (46%). May had the highest year-over-year increase and June had the second highest year-over-year increase. Construction, Transportation, and General industries had decreases in delinquency of 39 bps, 31 bps, and 8 bps, respectively. Health Care had a 10 bps increase in delinquency while Agriculture and Retail both had a 3 bps increase. Health Care is currently at an all-time high.

The PayNet Small Business Indices:

  • Provide early signals of future economic growth, demand for capital, and business fixed investment across multiple sectors of the economy.
  • Give lenders a snapshot of the future so they can adjust their approval criteria as needed.
  • Are a reliable predictor of small business financial stress.
  • Serve as a statistically valid indicator of unemployment change.

 

Join Jeff Jensen, Vice President, Keybridge; Sarah Briscoe, Senior Statistical Analyst; and Elaine Makdah, Senior Index Developer as they present the August small business insights webinar, moderated by Rissa Reddan, Senior Vice President Marketing. They will review the latest economic trends, the small business lending and delinquency activity and offer their insights on the implications for the commercial credit markets during these uncertain times.

For more insights on the data covered in this webinar, read our August 2020 Strategic Insights.