During the recession, small business owners who normally could have gotten loans suddenly found themselves being turned down—and those with outstanding loans sometimes saw the banks call in their loans for what seemed like no reason. As the economy improved, the lending situation didn’t—until now.
Things seem to be finally taking a turn for the better. According to the Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of small business financing, small business lending increased 17 percent in April compared to the same period a year ago.
Even better news: This was the ninth month in a row that the Index showed a double-digit increase—and that’s a good indicator that small businesses are getting ready to grow again as soon as consumer demand picks up (which is already happening in some industries).
“The fact that small businesses are hanging in there is a good sign for the economy,” PayNet president William Phelan Phelan told Reuters. “The data tells us they are having more of a pause than a major contraction.”
Of course, the news doesn’t mean getting a loan is easy. Getting a small business loan has always been a bit of a challenge even in the best of times. But if your industry outlook is positive, your company has strong cash flow and you can convince the bankers you’re ready to grow, now could be the time to seek financing.
Before you do, however, you need to be sure you’ve got all your ducks in a row. Banks were burned by the recession as well, and they’re facing new regulatory oversights that require them to review loan applications more carefully. So even though some banks are courting small companies, you’ll still need to jump through some hoops.