Smallest US businesses borrowing again: PayNet

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The tiniest US small businesses, which led the broader economy into the past two recessions and are widely regarded as the best hope for job creation in any recovery, are showing signs of improved confidence and financial health, according to a new study.

The examination of loan, lease and line of credit activity conducted by PayNet Inc for Reuters found that US businesses with less than USD 100,000 in outstanding debts began borrowing again cautiously this spring to invest in their businesses a trend that continued through the end of the study period in September.

Financing originations among these so-called microbusinesses are still down year-over-year. But they are no longer falling faster than originations for larger-sized small

businesses - those with borrowings above USD100,000 - as they were for nearly three years running.

"This looks like an inflection point," said William Phelan, the president of PayNet, which provides risk management tools to the commercial lending industry.

"These little businesses are a leading indicator and the signals they're sending are improving."

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