Reuters reported PayNet President William Phelan said small businesses re-engineered themselves during the recession and are now more confident and profitable, with lower-risk loan profiles, and are increasingly spending for expansion.
 
At the 2011 Reuters Manufacturing and Transportation Summit, Phelan said borrowing is up for new investment by small businesses, which have consolidated, incorporated technology to boost efficiency and outsourced while often keeping hiring dormant.
 
The Reuters report quotes Phelan saying, "What we've been undergoing is a new economic order. The economy is adaptable, and it's adapted to the new reality."

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small businesses, jumped 20% in October. It was the 15th month of double-digit growth.

Phelan said, "There's underlying strength in the U.S. economy that's not being reported by stock market indices.  Profits drive confidence, and we're not seeing that profitability reported anywhere because these are privately owned companies."

Phelan also stated small business is in better fiscal shape then in 2005, prior to the recession, with considerable improvement in risk profile.

According to the report, Phelan also added, "We've seen delinquencies improve consistently to levels that are now below risk from 2005, so that lends confidence in my mind that we've got these millions of companies in the United States that now have financial capacity that didn't exist three years ago."  Banks are "hungrily looking for earning assets" and small business offer an opportunity to diversify their loan portfolios.

To view the full Reuters video interview with William Phelan please utilize this link:
http://www.youtube.com/watch?v=hCRwYZxSeyA