PayNet Reveals Data of Lending Increase to Small Businesses Following Election

Small Businesses Increase Borrowing as Optimism Kicks In – PayNet Reveals

Thompson Reuters/PayNet revealed reports showing that small businesses in the U.S. increased their borrowing after the presidential election last year. It was the first time in six months that borrowing increased. But although this may be a sign of economic growth, there is still uncertainty whether it the optimism will hold.

A Positive Reaction

There is no doubt that the months ahead of the presidential election painted a picture of uncertainty for small businesses. However, this seemed to disappear soon after the election. PayNet’s reports show that small firms in the U.S. increased their borrowing by up to ten points. The Thompson Reuters/PayNet Small Business Lending Index rose to 129.9 in November, up from 119.8 just the month before.
Undoubtedly, many small businesses expect the coming years to be more promising regardless of the political divide in the nation. President Donald J. Trump has pledged many economic reforms that will benefit U.S. businesses, and the businesses seem to trust him to fulfill his promise.
Coincidentally, many small businesses are finding it easier to pay existing pack debts. PayNet’s reports showed that loan repayment delays of over 30 days fell to 1.67% in November, which was the first decline in about one year and a good sign for both small businesses and lenders. It may be a sign indicating that businesses are doing better, and it further increases optimism of a better future considering the corresponding rise in borrowing.

Good for Small Businesses, Good for the Economy

Although big firms have a huge stake in the U.S. economy, it is small companies that drive growth because they do much of the hiring, and higher employment levels consequently fuel economic growth. To this end, analysts are optimistic that the hike in borrowing may boost growth as small businesses have their eyes set on expanding their operations.
The Thompson Reuters/PayNet Small Business Lending Index is determined by the level of gross domestic product in the country. An increase in the index means that gross domestic product growth has increased by about one or two quarters ahead of the expected time. If this is the case, then this implies that small businesses are already expanding or planning to expand their operations, a move that would lead to job creation.
Large companies also have something to smile about, and their analysis of the economy is just as optimistic as that of small businesses. The American Institute of CPAs recently conducted a survey that showed that executives of large organizations were optimistic of better times ahead. The reports by AICPA revealed that 62% of chief executive officers, certified public accountants, controllers, and chief financial officers expected the economy to perform well for the coming year. The report was very promising as it was a rise from 38% for the previous quarter.

A Businessman’s Leadership

President Donald J. Trump identified himself as a businessman and not a politician throughout his campaign for the presidency. Additionally, he promised a broad range of economic reforms that he promised would work for the benefit of the economy.
One of the President’s major promises was that he would boost domestic production and ban the importation of certain products. He also promised that he would look for markets for American products both at home and abroad. These promises seem to have boosted the morale of U.S. based firms. For instance, the rise of the Thompson Reuters/PayNet Small Business Lending Index is a confirmation of an increase in gross domestic product growth, and the trend may continue if the President implements his reforms soon.
President Donald J. Trump has already demonstrated his intention to fulfill his promises. For instance, his recent deal with automakers that saw them agree to increase domestic plants was motivating for businesses across the nation. However, analysts say that it is too early to come to any conclusions as there are unresolved complications.

Who Stands to Gain the Most?

Some economic sectors are expected to reap the most from the turnout of events. For instance, the construction industry is anticipating to see a rise in demand for products and services once President Donald J. Trump begins building the infrastructure he promised. When it comes to demographics, Latino business owners are expected to perform exceptionally well.
According to The Business Journals, Latino-owned businesses’ growth has been three times higher than the national average. Their sales are projected to reach $640 billion in 2017. As such, they will play a significant role in creating employment and driving growth.

Uncertainty Still Looms

Now that it is evident who will lead the U.S., the uncertainty that had gripped the nation before the presidential election has been replaced by another one altogether. The president himself is still a divisive figure, and new threats are emerging every day.
For starters, President Donald J. Trump stirred controversy and fear throughout the nation with his proposed ban and crackdown on immigrants. He blamed immigrants for many problems, especially criticizing them for taking up employment opportunities. His criticism has also fueled racial and political division in the nation, and this is hurting businesses all over the U.S. Many businesses rely on immigrants for affordable labor, and the proposed crackdown has left many companies in uncertainty. Besides, immigrants are a key driver of the U.S. economy.
Small businesses are also worried about the impact of soaring healthcare costs as three-quarters of small businesses pay for their employees’ healthcare costs. Health insurances costs are projected to rise by up to 10% in 2017, according to The Business Journals. President Donald J. Trump repeatedly criticized the Affordable Healthcare Act and promised to repeal it, but this may not come soon enough for these businesses.
Finally, business owners are becoming increasingly concerned by the rise of cyber attacks. Cyber attackers are using malware to steal business information, demand ransoms, or even sabotage companies. Considering businesses’ increased reliance on the internet, this is proving to be a significant threat that can cripple numerous businesses and even the economy.

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