PayNet, the premier provider of risk management solutions and market insight to Canadian commercial lenders, reports the PayNet Canadian Small Business Lending Index (CSBLI) increased slightly from 118.4 in June 2016 to 118.7 in July 2016.  Compared to the same month one year ago, the Index is down 11%.
 
The Index is down eight straight months on a year-over-year comparison after 12 consecutive months of increases. Lending activity in Accommodation and Food decreased by 4%, and Transportation fell by 2%.  On a regional basis, lending in Saskatchewan increased by 1%, but every other region decreased, including Alberta by 3%.
 
“After seeing this pronounced wave of contraction in the Canadian economy continue for 8 months, things appear to be bottoming out,” states William Phelan, president of PayNet, Inc. 
 
Most Canadian private companies continue to maintain financial health.  The PayNet Canadian Small Business Delinquency Index 31-180 days past due decreased 3 bps from 1.17% in June 2016 to 1.14% in July 2016.
 
“On the surface, financial conditions of private companies don’t look that bad, but the prevalence of restructurings clouds the results,” Phelan added.  “Financial health should become more distinguishable shortly because restructures can’t continue indefinitely.”
 
In a first for the Canadian business market, PayNet is releasing historical and forecasted default rates for private commercial businesses. The data shows rates remain far below default rates before and during the Great Recession of 2007 – 2010.  Defaults hit an all-time low in 2012 at just 1.3% of all private businesses. The steady rise of defaults since 2012 can be viewed as back to normal risk taking. As a result, the rise in 2016 to 2.3% is a reversion to normal default rates.
 
PayNet will present this data derived from PayNet’s industry portal, sbinsights.paynetonline.ca to industry leaders at the annual Canadian Finance & Leasing Association (CFLA) National Conference September 21-23, 2016 in Niagara Falls, Ontario.