Borrowing Just Got Easier

Demand for small-business loans picks up, rates drop, and lenders are happy to oblige

Bargains for borrowers are back. The average interest rate paid by small companies plunged to 9.3% in May from 9.7% in April, says a survey by the National Federation of Independent Business. That leaves rates at levels not seen since September 1999. At the same time, demand for loans picked up noticeably: Thirty-nine percent of respondents say they are borrowing regularly, about 4 percentage points higher than normal. NFIB chief economist William Dunkelberg wonders whether that is a sign that entrepreneurs are finally beginning to see their cash flow get pinched by the economic downturn, which so far has been relatively mild for small companies. That said, few entrepreneurs report having a problem getting the money they need from bankers, who remain very accommodating. Only 4% report that getting credit is their most important problem.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.