Rather than taking a break after the busy holiday retail season, small businesses continued to expand through January 2014, according to the Small Business Lending Index released by Direct Capital, a national small business lender.
Direct Capital's January 2014 index showed a 2.3% increase in demand for small business financing, a clear sign of confidence that economic factors like consumer spending and the housing/construction market will increase throughout the year.
The index also showed a 10% improvement over January 2013, signaling a year-to-year trend of economic gain. Organizations such as the International Monetary Fund have published reports recently predicting economic gains in 2014 based on late 2013 and early 2014 data. PricewaterhouseCoopers Global Economy Watch for January predicts "advanced economies pick(ing) up speed in 2014."
"It wouldn't be alarming or even unusual to see a decline in demand in January because December is traditionally a strong month," said Direct Capital Senior Vice President Stephen Lanker. "So when we see even a modest increase like 2.3 percent in January, it's a good indication for a strong year. Business owners don't borrow unless they see a definite return, so they're one of the best leading economic indicators."
The Direct Capital Small Business Lending Index is based on an algorithm that collects data from more than 200 sources. It documents small business spending patterns and indicates future economic activity. Direct Capital has 20 years of experience in small business financing. Since its inception, the company has lent $2.25 billion to more than 80,000 businesses across over 1,000 different industries. The company was recently named to the Inc. 500/5000 list of the fastest-growing private U.S. businesses.