Small Business Lending Index

The Thomson Reuters/PayNet Small Business Lending Index (SBLI) is an economic indicator from Thomson Reuters Indices and PayNet Inc. Because small businesses generally respond to changes in economic conditions more rapidly than larger businesses do, the Thomson Reuters/PayNet Small Business Lending Index serves as a leading indicator of the economy.

The index, utilizing small business loan origination data from major lenders, measures the volume of loans to Small Businesses normalized to a base year - 2005. Seasonally adjusted, the index is presented as an absolute as well as by a percent change versus the prior year. It is published monthly as follows:

The index has its highest correlation with GDP change as a leading indicator, leading between 2 and 5 months in advance. The index undergoes periodic checks to examine the accuracy of the estimates over time.

Video Small Business Lending Index

Methodology

All data is collected by PayNet, Inc. PayNet collects real-time loan information from more than 350 leading U.S. lenders. Its proprietary database encompasses over 19 million current and historic contracts worth over $1.5 trillion.

PayNet primarily collects data from small business lenders in the United States, conducts research and analysis, develops and implements estimation methodologies and disseminates statistics to customers. Because PayNet receives its source data over time, estimates are routinely revised to reflect more complete source data. Preliminary and Revised estimates are reported as calculated without any reference to previously reported estimates for the same month. In addition, PayNet undertakes periodic studies that examine the accuracy of the estimates over time and for the existence of any systemic overstatement or understatement.

Maps Small Business Lending Index

Terms in Lending Index

An understanding of these terms will not only help you make an informed decision in the future but will also help you get loan approvals faster, as you explain your business loan preferences to the lender from the very outset.

Fixed Obligations to Income Ratio (FOIR)

The cumulative total of instalments of loans already availed by you and still due in relation to your income.

Annual Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every year.

Monthly Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every month.

Daily Reducing Interest Rates

The principal amount on which you are paying interest is reduced at the end of every day.The EMI you pay for a daily reducing rate is less than the one you will pay under a monthly reducing rate. Similarly, annual reducing rates will have the highest EMI.

Amortization Schedule

A monthly installment has 2 components; the Interest component and the Principal. Amortization schedule shows the amount of interest and principal you will be repaying with each payment.