Small Business Lending Index rose 7 percent in July

The growth of small business loans bodes well for the American economy going forward.

Thomson Reuters Indices on Wednesday released the latest edition of its Small Business Lending Index, which it develops in conjunction with PayNet. Per their report, loans to small businesses were up 7 percent in July, reaching 128.5 on the index, which is the highest level since March 2007.

According to PayNet's president, Bill Phelan, the data shows that SMBs have moved beyond just the bare minimum investment of updating their old equipment. Companies are now going further and, in many cases, expanding their operations. The report bears more good news, as the rate of late payments is at just 1.53 percent, close to the all-time low of 1.44 percent which was reached last October.

Phelan is also optimistic for the immediate future, saying, "A solid third quarter is taking shape here, for small businesses and for the U.S. economy." He adds that, historically, the index has been shown to have a clear correlation with both job hiring numbers and the nation's gross domestic product (GDP). In the latter case, a trend in small business lending typically precedes a similar variation in the GDP between two and five months later.

Job growth, on the other hand, slowed in August, according to official data released on Friday. Still, 142,000 jobs were added, slightly lowering the unemployment rate to 6.1 percent nationwide. While the numbers are lower than expected, growth in both hiring and lending has been steady for several months now, and the positive trend is expected to continue.

For small business borrowers and lenders alike, loan amortization software is a useful tool to have in what is still an unsteady economic climate. The ability to set automated amortization schedules can go a long way toward keeping default rates near historic lows.