Loans are always a good indicator of economic recovery – and with good news coming from many sources on consumer spending – many banks are willing to give them out again.
Many companies are experiencing a growth that was stagnant or stifled in the previous three years, but is now considered “healthy.” With this growth comes a need for more capital to expand business, which comes usually in the form of a business loan. The difference now is that banks are also confident enough in the healing economy to grant them.
Loans are a big indicator of the growth of small and mid-sized businesses that form a bulk of the U.S. economy, and many are watching closely to see if this means these businesses will also be expanding in the form of new hires. So far, while the economy seems to be growing steadily, it still hasn’t translated into job growth.
In another glimmer of hope, nearly three quarters of these new loans are being used to pay for mergers and acquisitions, which shows that companies are buying up their weaker competitors to prepare for sustained growth throughout the year.
Source: Denver Post, February 2011
