Small business employment & lending up in October & November

December 3, 2012 at 12:13 pm 1 comment

Some good news about small businesses to start the week: lending to small businesses was up in October, while employment, hours and compensation at small businesses rose in November.

The Thompson Reuters/PayNet Small Business Lending Index increased to 107.5 from 96.4 in September. This index measures the volume of financing to small companies. Importantly, PayNet reports that this could be due to a “growing sense of optimism among smaller firms.” PayNet also reports that long and short-term delinquency both declined in October.

Intuit Inc’s Small Business Employment and Revenue Indexes report that in November, small businesses saw an increase of 30,000 jobs, 0.5 percent increase in average monthly compensation (translates to $14), and 0.11 percent increase in average monthly hours worked. The most interesting aspect about the Intuit Indexes is that the data is gathered from firms with fewer than 20 employees– so, these are very small businesses. These businesses “comprise 87 percent of the total U.S. private employer base and employ 19.4 million people.”

Both of these issues are interrelated– small businesses need affordable capital in order to start up and grow, and in turn create the jobs and revenue that drive local economies. The rise in employment and compensation only underscores the important role of small businesses in the economy. While it these recent trends may be hopeful signs, there is still a long way to go to support small businesses in many communities. Credit markets may be loosening a bit for small businesses, but accessing capital remains a significant challenge for many entrepreneurs. The upward trend in lending, if it continues, could ease some of this constraint.  In order to do that, financial service providers across the spectrum– banks, credit unions, CDFIs, etc– need to expand their reach into various markets to reach aspiring entrepreneurs.

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Entry filed under: Banking, Banks, CDFI, Credit Unions, Economic Development, Economy, Jobs & Employment, Small Business. Tags: , , , , , , , , .

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1 Comment

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