Small business investment continued to register gains at the end of 2017 as delinquencies and defaults remained at low levels according to the latest small business credit trends from PayNet, the leading provider of small business credit data and analysis. However, some warning signs in financial health are starting to emerge.

The December 2017 Thomson Reuters/PayNet Small Business Lending Index (SBLI) decreased 1% to 136.5 from 138.5 (revised) in November 2017.  Compared to December 2016, the SBLI increased 2%.

Results show solid investment support from several sectors. Construction increased +7%, Transportation +13%, and Administrative and Waste Services +5% on a three-month rolling basis compared to three months ago.

Weaknesses are primarily in the services sector with declines in Information Services (-8%), Professional Services (-3%), and Health Care (-2%) on a three-month rolling basis compared to three months ago.

“The certainty from cut taxes played a role in driving more investment,” states William Phelan, president of PayNet, Inc.  

The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI) 31-90 days past due increased 2 basis points (bps) from 1.36% in November 2017 to 1.38% in December 2017; this is the highest it has been since November 2012. Compared to one year ago, delinquency increased 6 bps.

Default rates remained essentially flat year-over-year and month-over-month with the PayNet Small Business Default Index (SBDFI) at 1.83% for December 2017.  Information Services defaults rose swiftly by +17 bps since last month. Conversely, default rates continue to fall rapidly in the Mining, Oil, and Gas sector and Transportation sector, -25 bps and -20 bps since last month, as both sectors continue to benefit from turnarounds in economic conditions in their respective industries.

“Over the last couple of months, certain industries and regions of the country are faring better than others,” Phelan noted. “Small businesses are showing positive momentum.”