U.S. small business borrowing rose in February in spite of the Federal Reserve’s interest rate hike. According to Thomson Reuters/PayNet data released Monday, the Small Business Lending Index rose to 132.9 in February, up from 124.2 in January. The Index remains down 4 percent from last February.
Small business owners are hopeful about tax cuts from the Trump administration but remain cautious about investing amid other policy uncertainty, according to the data.
“The private companies are still looking for the right time and the right conditions to put their money to work again,” said Bill Phelan, PayNet’s chief executive and founder. “They don’t have the confidence to go all in.”
The index data also shows that companies are paying back existing debts. The percentage of loans more than 30 days past due remained unchanged from January at 1.67 percent.
With the stock market and U.S. dollar both holding strong, economists expect small business loan approval rates to continue to surge.
The PayNet Small Business Lending Index reflects data collected from more than 325 of the largest leading lenders in the U.S. It measures the volume of small business loans issued over the past 30 days. Because small businesses generally respond to economic changes more quickly than their larger counterparts, the Index provides a snapshot of future economic changes and demand for capital in several sectors of the economy.