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Small Business Credit Demand Expected to Rise in Coming Months
Published on May 31, 2011
Read our article, 'Small Business Credit Demand Expected to Rise in Coming Months' at 'Time to Start Up,' the small business blog by BizFilings.
Many analysts have pointed to community banks' lack of interest in tapping the national Small Business Lending Fund as indicative of the overall state of the credit market, with lending stalled due more so to weak demand than tighter policies.
But as companies emerge from the recession and seek to expand their operations through hiring, marketing and equipment investment, the demand for credit is expected to grow as well.
As Maria Coyne, executive vice president of business banking for the Cleveland-based KeyBank, recently explained to Entrepreneur magazine, small firms are actually borrowing to afford additions to their payroll.
"[Small businesses are] also taking advantage of existing opportunities," Coyne told Entrepreneur. "Perhaps they've explored other ways to sell their products or services or expand into new markets and now they need to borrow to bolster their inventories. Maybe they're taking advantage of existing tax credits to purchase heavy equipment that can help a company be more efficient."
But underlying these market trends is consumer activity, which is often seen as the principle driver of sales, hiring and investment. With the most recent Thomson Reuters/University of Michigan Consumer Sentiment Index showing a three-month high in May, analysts may anticipate credit market growth in coming months.