The U.S business borrowing rose 20 percent in December,an increase for fifth straight month. The data was reported by PayNet Inc on Tuesday showed fresh signs of economic recovery gaining ground.
Comparing from the same month the previous year this is the fastest growth since March 2006. The index has registered its highest ever borrowing since 2008. Separate data released also made it evident that there has been a decline in business loan inadequacies.
William Phelan, PayNet’s president, says, “The recovery is growing and remains on a solid footing.” The surge in terms of borrowing for small businesses is seen as a harbinger for broader economy because it accounts for 80 percent of new hiring. Factory activities in Midwest have hit 22-1/2-year high in January as orders have risen and employment opportunities have brightened. Consumer spending has also risen shows another report.
High unemployment in the US still seems to persist as unemployment rate is at 9.4 percent last month. A lagging housing market remains a burden for the economy. Phelan said, “I don’t think we are ready to declare victory quite yet.”
One large manufacturer, however, has related data to PayNet in December and said businesses were buying new equipment so as to replace outdated machines and not just to increase output. Also fewer companies are now behind their existing loan payment option. This will boost borrowing. Higher repayment rates may free up capital that lenders may have kept aside for loan default. Accounts that remained in moderate delinquency fell to 2.45 percent from 2.56 percent in November last.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to