The signs of a V-Shaped economic recovery are all around, for anyone willing to see.
Consumer confidence has jumped faster than at any time in the past 30 years. In addition, the ISM Manufacturing index is now in a zone consistent with economic growth, and construction has increased two months in a row.
Despite all this, many observers still forecast a drawn-out recession. They say that the U.S. is not in recovery yet, nor is it on the verge of recovery. The pessimists’ “Exhibit A” is often that bank lending remains weak. After peaking at $1.6 trillion in October, commercial and industrial loans (C&I loans) have declined in each of the past six months, for a total drop of 5%.
While we understand the focus on lending given the financial crisis, this argument has several weaknesses.
Looking at only the last six months is a bit misleading as C&I loans spiked up in October 2008, with many firms drawing on lines of credit they feared might evaporate in the future. As a result, the level of loans in October is an artificially high base for making comparisons. And some firms may be repaying those loans now, thereby reducing loans outstanding.
Moreover, borrowing from a commercial bank is not the only way for companies to obtain funds. They could generate funds organically by increasing profits. This happened in the first quarter of 2009 when U.S. corporate profits increased at a 14.2% annual rate, the first gain in almost two years.
Forbes Money - Read The Full Article Here
Things are starting to look better for all commercial business in America, but companies must look for new financing options to facilitate there survival and prepare for the future. Staying diligent will be the key to success and prosperity in this new economy. Most often a commercial financing professional will be able to find a better financing option for your business to stay afloat.
– Jim Hagan
Discount Capital Corp.