Despite the start of the Federal Reserve's reduction of its monetary stimulus, economic growth has continued as evidenced by the increased borrowing of small businesses in the US in November 2013 compared to that of the previous year, Reuters reported.
Data from the Thomson Reuters/PayNet Small Business Lending Index increased 1% in November to 111.4 compared to that of the year before, the report said. The index measures the volume of financing given to small firms. Data revealed that the highest per day borrowing rate in 2013 was recorded in November, which only has 20 working days.
PayNet Founder Bill Phelan said the result was another sign of continued expansion. He said that more demand is seen by small businesses for its goods and services, making it all good for the GDP.
The report said small firms usually borrow money in order to purchase new tools, factories and equipment and as such, increased borrowing can also be an early sign that more hiring could be expected in the future. A correlation to total economic growth one or two quarters in the future has historically been seen by PayNet's lending index.
The report said the job market outlook, and more broadly, that of economic growth, is important as the Federal Reserve starts to taper its bond buying program and evaluates the tolerance of the economy for future reductions. Federal Reserve Chairman Ben Bernanke had suggested in December that its stimulus program could end this year.
Another index also revealed that small businesses have started to take on a bit more risk with delinquencies marginally rising from record lows, the report said. Thomson Reuters/PayNet Small Business Delinquency Index said delinquencies ranging from 31 to 180 days in November increased 1.45% of all loans made compared to 1.44% in October. In August 2009, the measure of accounts overdue as a percentage of all loans posted a record high of 4.73%.
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