The April 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) dropped to 123.1, down 8% percent from 133.7 in March 2017. Compared to April 2016, the SBLI is down 5% which is the third consecutive year-over-year decline.

“This report was a big disappointment. Small businesses have pulled back investment in 10 of the past 12 months,” states William Phelan, president of PayNet, Inc. “At a time when growth is becoming more focused on large cap technology companies, a significant portion of the U.S. economy made up of main street businesses like farming, medicine, transportation & warehousing, and construction are finding tougher business conditions.”

Borrowing in Health Care services fell 14% due in part to continued uncertainty regarding the future direction of the sector.  However, a positive trend is showing in Construction (+4%), Accommodation & Foods (+2%), and Arts & Entertainment (+11%).

Small business financial health is at the highest level of risk in more than four years. The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due increased to 1.36% in April 2017 from 1.33% in March 2017.  Compared to April 2016, delinquency increased 11% by 14 bps.

Within the industry sectors, Construction and Transportation exhibited higher delinquencies of 8 bps and 11 bps respectively, while Agriculture showed a 4 bps decrease.

The national default rate continues to grow at a steady, moderate pace. At 1.9%, it remains 34% below 2005-2006 averages.

“This month’s report is a tale of two economies – large dominant techs expanding versus main street pulling back,” Phelan noted. “Time will tell which market is the more accurate reflection of the underlying economic fundamentals.”