A recent study by PayNet, Inc., a firm that risk management tools to the commercial credit industry compares growth rates and projected default rates of major equipment sectors identifying safe and higher growth sectors. This data is derived from PayNet’s database of 20 Million C&I loans and leases worth more than $1 Trillion to millions of U.S. small businesses.
- Agriculture continues to outperform other sectors based on strong export demand.
- The Transportation and Construction sectors, among the most seriously hurt in the recession, have come back, although they still reflect above average default rates.
- Retail remains weak in line with reduced consumer confidence.
According to PayNet, Inc. an analysis of the cost of defaults confirms a stable small business environment. Historical default rates reflect the improvement in borrower credit quality. At the peak of the recession, small business borrowers defaulted at a 7.2% rate. This was a significant increase since 2006 when the default rate stood at only 2.9%. In 2012, business failures fell to cycle lows of 1.4%, and they are projected to remain low at 1.6% through year-end 2013.
These default probabilities are derived from PayNet AbsolutePD®, a credit risk forecasting system which provides accurate estimates of default on individual obligors using their loan payment characteristics in combination with macroeconomic factors. These default estimates for millions of business borrowers are then combined at the portfolio, industry, and geographic levels to form a risk outlook for 2013-2014.
The commendable financial health of small businesses displayed through this data creates an environment that is attractive for financing growth. PayNet will be providing this special study at their booth at ELFA’s 52 annual conference in Orlando, Florida.
On Tuesday, October 22, 2013 at 11:00 a.m. from the conference PayNet will also be participating in a panel session Growing with the Brakes On: The Contradictory Mandates Facing Today's CEO's. This session will provide a high-level overview of current industry data and trends relating to these challenges as a backdrop for a panel discussion among industry experts covering topics such as market selection, automation, pricing/structuring for risk, portfolio management and regulatory compliance.
PayNet is the premier provider of risk management tools and market insight to the commercial credit industry, collecting real-time loan information from more than 250 leading U.S. lenders and turning it into actionable intelligence. PayNet’s proprietary database – updated weekly – is the richest and largest collection of commercial loans and leases, encompassing over 20 Million current and historic contracts worth over $1 Trillion. Using state-of-the-art analytics, PayNet converts raw data into real-time market intelligence and predictive information that subscribing lenders use to manage risk, lower operating costs, originate more loans, and improve their business strategy.