All Systems Go for Small Business Lending

In my last post, I discussed how our latest quarterly North American risk survey indicates consumer re-leveraging is picking up. That same survey also found that small business lending appears to be on a healthy trajectory.

In our survey of bank risk officers in the U.S. and Canada, 67% of respondents expect the supply of credit for small businesses to satisfy demand over the next six months. Moreover, 40% feel the approval rate for small business loans will increase, compared to just 12% who felt the rate will decrease.

In terms of actual credit extended to small businesses in the next six months, 46% of bankers surveyed say the amount of new credit made available to small businesses will increase, while only 12% say the amount will decrease.

These optimistic findings are consistent with the real-world data I’ve seen lately. The Thomson Reuters/PayNet Small Business Lending Index is at approximately the same level we saw in late 2007, and the index is dramatically higher than the levels we saw during the recession and throughout much of the recovery.

This is good news for a key lending segment that is often a strong indicator of the mood and risk appetite among bankers.