Small business owners are seeking loans at a feverish pace in hopes to seize growth opportunities as the 2013 holiday season kicks off, according to the October Small Business Lending Demand Index released by Direct Capital, a leading national small business lender.
 
The index registered its highest level of demand since it began tracking data in January 2012, Direct Capital said. October demand for small business financing increased 13% over the 2013 monthly average, its second consecutive month of double-digit growth. September demand spiked 12 percent after a lull in August and July, indicating a recovery from the summer doldrums and pointing to a growth trend to close out the year. For the year to date, lending demand is up 24 percent compared to the same point in 2012.
 
“Everything was aligned for a record month in October and it delivered,” said Stephen Lankler, senior vice president at Direct Capital. “Small businesses are closing the year assertively. They have polished up their credit and they are now tapping into their ability to access credit so that they can strike on the opportunities for growth as they move into the holiday season and plan for 2014.”
 
Lankler cited Experian’s third quarter Small Business Credit Index - which showed marked improvements in small business credit quality and decreased delinquencies - as another strong sign that small businesses across the country are becoming more proactive. “The study shows that businesses are rapidly growing their outstanding balances while delinquency rates are falling,” said Lankler. “That means small businesses are taking on more credit and paying it off on time because they are achieving their revenue goals.”
 
Lankler said he expects daily demand for loans to continue to be strong in November leading to a large spike in December. “November is an interesting month because loan demand is strong, but Thanksgiving takes a meaningful bite out of the overall activity,” said Lankler. “December is really the month to watch out for right now. On one hand, you have small businesses trying to procure capital equipment and leverage deductions to lessen their tax burden and on the other hand you have equipment dealers looking to cut any deal possible to capture year-end sales. Financing is really linchpin to bringing it all together. So, we expect December to be a major month in terms of demand for financing.”
 
Direct Capital’s Monthly Small Business Lending Index is based on an algorithm that collects data from more than 200 sources.