Mar 5 - PayNet president Bill Phelan says latest report on loan demand from small businesses indicates they will continue to play it safe in 2013.
Borrowing by small US businesses fell in January. That's according to the latest report the Thomson Reuters -- small business lending index. And it founder and president bill Whelan joins us now welcome bill. Now that the fiscal cliff deal happen in January to brighten the mood of the Y yeah. This negative this in this number. Well actually you know what we see is I don't think anybody. Fuels like -- the economy as -- reached if you know its full potential yet rated music everyone kind of thinks -- you know there's still a lot of a recovery that needs to occur. And we clearly see that in the status that were releasing it the small businesses are holding back still. And they really held back into when he twelve. You know the index is a great measure. Of the moral borrowings but it's really measuring your -- of investment in their property of their plan their equipment their tools that are their services whether expansion. And it's basically been fairly flat real real basically flat in 2012. And so I don't think it's as much of fiscal cliff issue or sequester issue is much that as much as just a the small businesses don't see the conditions. Presenting themselves for investment commitment -- citizen that they are worrying about. Well you know what what we know that data is that that the index went through a few percent and we also note that the big companies grown a -- you know the Dow Jones Industrial -- is back. But what we see is that they're they're playing it safe right now. And they're playing it safe means you know let me just put this in perspective before the recession. The small companies in having index value of a 133. Now there at a 113. So there twenty points below the peak before the recession so the well below their potential -- were back before the recession. And so there holding back what they look at delinquencies -- declined just slightly in January. What does it tell us well that they're like they're the safest investments around right now these small companies are incredibly safe investments. What we see in the data is the the default rates by the small businesses -- the lowest levels in all time and in 2012 only one point three out of a hundred small companies defaulted or went out of business. By year end and compare that with these bigger companies that issue high yield bonds that number was 3%. So you've got one point three for the small companies and 3% for the big companies. In effect for credit rating forecast for next year's along those lines the big companies three point seven. According to Moody's and S&P. But ours is really still around 2%. So there's a very safe investments that will Lindy is thinner in January we've got the jobs report coming up soon well what about the outlook for jobs what are you sensing given the numbers here you've got. What we see is when the small businesses are holding back like this has a real cost in jobs in the economy. And we're estimating that cost right now to be about 840000. Jobs that have not been created by the small companies will we see is every point. In the index means 42000 jobs across the millions of cognizant of these small businesses -- in the US. With that index twenty points below its all time peak or where was before the recession. That means that there's about 840 or 50000 jobs that just haven't been created by the small companies I think that's really. Hole in the economy back I think everything recovered but we've just got to get these small businesses to come fifteen seconds left built a what's the outlook for him. The outlook from here is sick and steady for the small companies. Foot but probably some what some some very slow growth for 20/20 third some -- -- yeah thanks -- for joining. Our thanks -- -- -- president bill payment I'm Fred Katayama this is --