For the third consecutive year, all economic indicators are pointing to steady economic growth in 2016. It may not be the economic boon that everyone is waiting for, but the steady growth is a welcome sign that the economy continues to head in the right direction.
According to a recent Kiplinger’s Economic Outlook, GDP is predicted to climb to 2.8 percent in the latter part of 2016, up from the 2.5 percent in 2015. Most economists agree that key factors like the unemployment rate will fall to 4.8 percent by November, down from the 5.0 rate we saw this past October.
Interest Rate Increase?
It bears watching, but will a slight increase in interest rates affect small business lending? Some economists believe that there will be minimal to no effect on small business growth or investment. The rate has not increased since 2006 and it is believed that many small business owners have built the increase into their operating budgets for 2016.
SBA Loan Approvals up 29 percent in 2015
The best way for the US Small Business Administration to measure how the small business economy is doing here in New Jersey is through the analysis of our loan portfolio. In 2015, we saw a record $822 million in loans approved to New Jersey small business owners. Those dollars went to more than 1,700 state small business owners. We found that 63 percent went to existing businesses, while 37 percent went to startup companies. Of the state’s 21 counties, SBA saw an increase in loan approvals in 18 of those counties – a very good sign that New Jersey’s economy is on the upswing.
More Spending in 2016
An improving economy has led to more spending, and that spending has led to investment in equipment that has spurred production and produced healthy economic growth. We believe this trend will continue to move upward in 2016. Our plan this year is to increase outreach to lenders to ensure that small businesses have greater access to capital in 2016.
Fee Reduction Extended through 2016
For the past three years, the SBA has focused on smaller loans of $150,000 or less. In fact, the average SBA loan in New Jersey was $473,000, slightly lower than the previous year’s average of $482,553. This has helped to get capital out to communities where it could make a real difference, especially to our underserved communities that use these small dollar loans more frequently. Although this program was originally slated to expire last year, we are excited to announce that it has now been extended through fiscal year 2016.
Steady Growth for 2016
Overall, small business owners will continue to see improved unemployment numbers, an uptick in GDP, benefit from lower energy costs and a slight increase in consumer confidence. With a new president taking office in 2017, it just might set the stage for a sequence of events that will continue to extend steady economic growth here at home.Related Articles: