Small business lending demand decreased 14% in July, according to Direct Capital. The dip in demand was predictable, as many business owners traditionally choose July for summer vacations.

“July has always been the slowest month of the year in terms of small business lending demand, so no major surprises here,” said Stephen Lankler, Direct Capital’s Senior Vice President of Marketing. “However, I would characterize the drop-off as larger than expected.”
 
Lankler said the decrease was likely accentuated by two factors. First, a strong first-half economy, because when small businesses are doing well, more business owners take vacations and they do it for extended periods. Second, he said, because the July 4th holiday was in the middle of the first week of the month, it likely encouraged more people to take some of the surrounding days off.

“Any meaningful change in the number of business days worked has a profound effect on the data,” he said.
 
Despite the decrease, demand in July was still up 8% over July 2012 and year-to-date demand is still up 30% over this time in 2012.

Lankler said he’s encouraged by the continued year-over-year growth, but there are trends in the Index that need to be closely monitored. “On one hand, the Index shows 30% growth year-over-year, but that growth percentage is also decreasing monthly.” He said. “September will be a big bellwether month. You can generally count on growth in August, but if that continues in September you should expect the remaining four months to be very meaningful in terms of small business lending demand.”
 
Direct Capital’s Monthly Small Business Index is based on an algorithm that collects data from more than 200 sources.