Unusually harsh winter weather didn’t slow small business growth in February as demand for lending and financing increased 9.7% over January, according to the Small Business Lending Index released by Direct Capital, a national small business lender.
In addition to outpacing January, February 2014 was 23% stronger than February 2013. Together, January and February 2014 are 17% stronger than the same two months of 2013.
The February increase is another indicator of a strong 2014 because it occurred despite Arctic cold temperatures and snowfall throughout much of the U.S. that kept consumers indoors and reduced the number of shopping days in the month. While other indicators dipped slightly in January and February, the Small Business Lending Index has revealed a persistent confidence among small business owners that consumer demand will be strong in 2014.
That confidence in consumer demand, expressed by their willingness to pursue funding for inventory and expanded facilities, continues a pattern of steady growth that extends back to the fall of 2013. Among other indicators that growth will continue in 2014: President Obama’s most recent budget proposal includes less money in the SBA Budget to cover loan defaults. The Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies, rose to 117.2 in January, up 4% from a year earlier. A rise in the index is historically correlated with stronger U.S. economic growth a quarter or two in the future.
“Despite a short month and significant weather issues affecting small businesses across the country, lending demand in February reached its highest point since we started tracking it at the start of 2012,” said Direct Capital senior vice president Stephen Lanker.
The Direct Capital Small Business Lending Index is based on an algorithm that collects data from more than 200 sources.