Financial Advice for Dealing with Irregular Business Income

Starting and running your own business is the epitome of the American Dream. Who wouldn’t love to be their own boss, the master of their own destiny? As ideal as that may sound to many, it can also be scary to take that leap of faith knowing that you, and you alone, are responsible for generating income.

When you are an employee, you’ll generally have a set income (barring those who work off commission, of course) and can allocate your money accordingly based on your paycheck. But, when you are the business owner, your income is based primarily on how well your business is performing.

Small businesses are notorious for irregular income, especially when you are first starting out. Fluctuations in cash flow can make or break your business. Whether you experience irregular income due to the seasonality of your industry or if you depend on the sporadic payment of clients, it is essential to be prepared.

At the end of the day, it all comes down to budgeting. If you set up your budget in anticipation of irregular income, your small business will inevitably fare much better.

Use these five steps to ensure that your business is prepared for income irregularity:

Account for Fixed Expense

Every month, there are expenses you know you will have to pay and that are pretty consistent in terms of amount. Fixed expenses like your rent or mortgage, health insurance, and Internet access typically don’t fluctuate from month to month. Know how much you need every month and be sure to set that amount aside. These expenses are vital to keeping you in business.

Estimate Variable Expense

Just like with fixed expenses, there are some costs that you know you will have every month, but the actual amount of these bills can fluctuate. Expenses like air conditioning, heat, electricity, and water are often determined by how much you use. As your business grows, these expenses will inevitably grow. It’s best to estimate these costs based on several factors, including historical data (about how much it usually costs), the time of year (things like A/C and heat vary significantly based on the weather), and how many employees you have. Plan to spend on the higher end of your estimation, but hope that your expenses fall lower.

Limit “Luxury” Expenses

We all fall victim to this. You want the best tools and equipment that money can buy. After all, this is your business. Investing in it will pay off in the end, right? This may be true, to an extent. After accounting for fixed expenses, which don’t have much wiggle room in terms of pricing, it is critical that you are able to measure the ROI on any expense. Sure, it’d be great for each of your employees to have an iPad, but can you justify that expense in your long-term strategy? Eliminating the luxury expense or going with a second-tier option can make more sense until you have enough cash saved up, especially for businesses with irregular income.

Estimate Your Monthly Revenue

Revenue projection is a necessary evil. It can be extremely difficult to pinpoint what you think your income will be each month, but it’s important to get as accurate an estimation as possible. When estimating, it’s best to err on the side of caution and project low. Take into account any sales and promotions you will be running that month, as well as any outside factors. Is there an event scheduled near your restaurant that will drive foot traffic in the door? Is there going to be construction in your parking lot that may decrease traffic? If it could affect your bottom line, be sure to incorporate it into your projection.

Expect the Unexpected

The one thing that you learn pretty quickly when you’re a small business owner is that there is no way that you can plan for everything. Any number of things can happen that you failed to anticipate, from a broken air conditioning unit to road closures near your place of business. All these things can inevitably affect your bottom line. While it definitely helps to have an emergency fund for rainy days, sometimes the ‘unexpected’ emergency can completely drain your cash reserve. It’s important to have a contingency plan in place for such events. Depending on the circumstances and the amount needed, you can rely on personal savings or borrowing from friends and family to tide you over. If this isn’t an option and you don’t need money immediately, applying for a loan from the bank is always a possibility. But oftentimes emergencies are time-sensitive and you’ll need capital quickly. Short-term business loans from alternative lenders can help you get access to the money you need in within a short time-frame.

Irregular income just comes with the territory of being a small business owner, particularly if your business is seasonal. Knowing your bottom line and planning your budget accordingly is the key to keeping yourself in business.

Christina Memorio is an SEO Specialist at Business Financial Services. Her content covers a wide variety of topics relevant to small-business owners, from financial advice and alternative funding solutions to social media and content marketing practices for SMBs. Connect with BFS on Twitter.

Tweet Your Small Business Out of Debt, Increase Sales

When sales are low and paying for traditional advertising, like newspaper ads and fliers, is pushing your small business further into debt, perhaps it’s time to embrace social media.

Social media offers free platforms to advertise, brand and build your business. Learn how to use Facebook, Twitter, Pinterest, Google+ and other social networks to increase profits and hopefully start paying off the loans that are weighing your business down.

Social Media Marketing Increases Sales

A virtual presence makes a difference.

In 2012, 73 percent of Fortune 500 companies used Twitter and more than 80 percent of executives operated on the principle that social media use resulted in increased sales, according to the Dartmouth Center for Marketing Research and The Economist.

If you haven’t already jumped on the social media bandwagon, you’re missing out. For those of you breaking into this territory, social media use refers to the participation in virtual communities using mobile and web technology. Instead of getting into more credit card debt to pay advertising bills, use social media to network with new consumers eager to purchase your products and services.

Utilizing these resources will allow your small business to communicate with consumers at no cost, while creating engaging relationships. As more companies begin to take advantage of social media, it is important to make sure you are creating dynamic profiles, continually updating your sites and interacting effectively.

You can use Facebook, Google+ and Twitter to build a following by regularly sharing important or interesting industry news, exciting changes and relevant product offerings from your small business.

Schedule Social Media Posts

To make sure that you are regularly posting, make an editorial calendar that provides the time to research and create quality posts. You can even use programs that will allow you to write posts ahead of time and publish them on specified dates. With Facebook all you need to do is type in a post and change the date at the bottom or the posting box to put out a future message.

You can also download TweetDeck for free to schedule posts on Twitter, Facebook and LinkedIn. Other free programs to checkout include HootSuite and LaterBro. Play around with different programs to see which one best fits your business needs.

Also, as you begin to participate in more social networks, you will want to make sure your time is divided up intentionally.

Go Forth and Tweet

Twitter is an excellent place to get customer feedback. Ask questions to find out what consumers specifically value about your business. Improve products you already offer by learning what doesn’t work for users.

Engaging with users shows that you take their opinions seriously and are interested in what they have to say.

You can also use Twitter to address complaints immediately. While publicly handling frustrations shows consumers you care, you also might consider taking some conversations offline, especially if you suspect they might become heated.

All it takes is a brief and timely response to demonstrate that you listen and take action when there are problems.

Use Pictures to Sell Your Product

Facebook, Pinterest, Google + and Instagram are perfect for sharing images of your products and services with potential consumers. Using art and creativity can get people interested in your company and encourage them to share those pictures of products with their friends. All it takes is some snaps from your smartphone.

If you can, post company pictures of what goes on behind the scenes.  Providing photos of employees at work or in a more relaxed setting, offers a personal connection to viewers, so that they can see a face, not just a name and job title on “About Us” webpages.

Videos Engage the Viewer

Increase sales by posting videos on YouTube and linking your website in the description. Not only can you showcase your products and services, but you can also provide how-to videos on other subjects relevant to your industry.

While you’re on YouTube, take time to comment on videos related to your field. This will promote your brand, getting your name and ideas out there for others to see.

Use Social Media Analytic Tools

As you begin to utilize various social media networks, be sure to measure results to see the performance of each network. If one network is not getting results, either take a different approach or focus on the more successful networks.

Analytical tools to measure your results are available as free or purchased services. You can begin with the free services, but if you are spending a lot of time building your social media presence, you may eventually want to pay a small fee to monitor your activity. Free analytic tools for Facebook include Minilytics and Fan Page Insights. Measure your Twitter activity using TweetReach, TwitterCounter or TweetStats.

Foster User-Generated Content

Have consumers compete by posting their own videos and pictures where your product is incorporated into their lives. This promotes artistic engagement and originality, allowing each user to showcase their personality, while showing off your products.

Make sure to set clear guidelines and goals for these contests. You can offer newer items you sell as prizes in order to introduce users to unfamiliar products or services.

Share, Share, Share

As friends on networks put up interesting content and images that relate to your product, be sure to retweet, share and like their activities. Being an active participant in a community means paying attention to what others are doing.

Retweeting, liking and sharing also puts your name out there, showing preferences and endorsement. Be careful to not share information that will bring negative attention to your business.

Creating Your Brand

Maintain a consistent voice, tone and persona in all your social media. The communities you’re involved with on Google+, the avatar you use for Twitter and the types of images you have on Facebook  should create a unified picture of your small business.

In the end, users should feel they are getting to know you, your products and want to be active in your social circle. Make this social media persona fun, transparent and accessible, not just a sales pitch to boost business.

A Good Year for the Doomsday Business

There are only 11 days left before the New Year – and before we hurtle over the fiscal cliff. Only four more shopping days till Christmas.

Got your attention? Of course. Nothing concentrates the mind as much as a countdown. Once we get to the T-minus something-or-other stage, we really begin to focus on the tasks at hand.

For instance, we may not get the best deal from the economic solons in Washington, D.C., but they’ll grind out something. Why? Because they’re counting down.

We may not buy the best-considered presents for everyone on our list, but we’ll get them something, because when we hear that mental 3-2-1-0, we really get clicking and we get things done.

Of course, any well-laid plans for those two days are moot if the world ends tomorrow. And that’s what’s predicted based on some nutty – we think – interpretations of the Mayan Long Count calendar. It began calculating dates back in 3114 B.C. and supposedly presages the end of the world with the dawning of tomorrow’s winter solstice. That’s T minus 5,126 years. Talk about your long countdown.

Not the First End of the World

This is not the first time the world ended – or was on the launch pad to do so. Actually, it’s the second time this year. Radio mogul and self-proclaimed preacher Harold Camping predicted that the world would end on May 21, 2012. He was wrong. Nothing (much) happened. We survived.

Our world also didn’t end the other two times that Camping predicted it would, once in September 1994 and again in March 1995.

Of course Camping was just another adherent in a long line of end-of-the-world predictors going back – as far as we know – to the early days of the Bible. Similar prophecies went unfulfilled through the Middle Ages with the first Millennium scare; the Anabaptists of Munster also got it wrong in 1530. Then the trend visited the American heartland, where:

  • William Miller and the Adventists in the 1840s foresaw doom.
  • Charles Taze Russell’s Jehovah’s Witnesses in the early 20th century predicted the end.
  • William Branham of the Pentecostals had doomsday clocked in for 1977. (Branham’s end came even earlier. He was killed by a drunk driver in 1965.)

No doubt, many of those apocalyptic proselytizers had sincere religious beliefs that inspired their prophecies and began their countdowns to earthly anomie. But could there have been another motive? At least in modern times?

Supposedly, Camping didn’t do too badly money-wise being such a Negative Nelly. Thousands of his followers emptied their bank accounts and sent him a whopping $120 million in fervent support, the last time before his last countdown fizzled. And then there’s Hal Lindsay, whose 1970s nonfiction book, the Late Great Planet Earth, sold millions of copies predicting the world’s end in 1988.

Armageddon Good for Business

It seems that Armageddon peddling, more than anything else, is simply a good business model. Today, hundreds of books, videos and websites predict all manner of destructive scenarios. We are threatened by:

  • Galactic realignment
  • Polar shifts
  • Killer solar flares
  • Asteroids
  • Comets
  • Runaway planets crashing into the earth
  • Black holes

Yet, we somehow manage to find a way to survive the un-survivable – for a price.

And 2012 has been a particularly good year for the doomsday industry. Why? Because it had a countdown. Not only did book and video sales soar, but bulk supply sales climbed, freeze-dried meals went on back order, survival kits raced off the shelves, and shelters got built and stocked, as the countdown got closer to zero.

Of course, if you’re reading this post sometime on Friday, Dec. 21, 2012, you’ll know that yet another countdown faded away into oblivion without marking a conclusive culmination of our earthly endeavors.

Such prognosticating failures rarely faze the faithful, though. No doubt some entrepreneurial soul, somewhere — one tinged with a pseudo-scientific bent, perhaps — will pick up the baton and calculate yet another day that the world will cease to exist. Give it less than a year.

Then the word will go out and more profit will be reeled in from the unthinking and the very afraid. For whether or not the world will actually ever end based on anyone’s countdown, there is one thing that holds true every minute of every day throughout the known universe – somewhere, another sucker is being born.

Preparing a Business for a Hurricane

With the latest in forecast technology, it’s no longer a surprise when a monstrous storm like Hurricane Sandy is on the way. There’s usually substantial time for meteorologists to carefully study projected storm paths, make predictions and warn people of potential devastation.

As dire warnings of Hurricane Sandy included life-threatening flooding and extensive power outages, millions of people living on the Eastern Seaboard were able to collect provisions, evacuate to higher ground and settle into shelters.

As the storm pummeled the East Coast, leaving millions of people without power and at least 45 dead in nine states, it also destroyed countless businesses. While the financial market reopened today along with limited mass transit, not all American companies will be able to recover as quickly.

According to the Gulf Coast Back to Business Act (2007), a bill introduced to address ongoing needs in the Gulf Coast states following Hurricanes Katrina and Rita, Congress determined 43 percent of businesses that close following a natural disaster are never able to reopen. And within two years, according to the Library of Congress, an additional 29 percent of damaged businesses end up closing down permanently.

The Importance of Preparing a Business for Disaster

The devastation caused by Hurricane Sandy is a reminder to business owners nationwide to weigh the risk of a disaster and put a comprehensive recovery plan in place prior to a storm.

While creating a contingency plan may seem somewhat time-consuming and costly, the return on investment is extraordinary and may make the difference between saving a business and going under.

This plan should include a complete inventory of equipment, supplies and proof of equipment ownership. “Before” photographs of valuable equipment and serial numbers are also important in the event they are needed for insurance claims.

Flooding always increases the opportunity for loss of equipment and data, which can devastate any business. Keeping servers in a basement, for example, is not recommended and should be taken into consideration when creating a plan.

The ability to back up data and possibly store data offsite is essential to many businesses. It’s also crucial to make an investment in alternate power, such as a generator or backup battery for a computer system, so as to prevent data loss and interruption in service. Testing the disaster recovery plan several times a year is also vital according to Microsoft, as close to 75 percent of companies that test backups experience failures.

Another important step to ensure business recovery is to make sure your insurance policy matches business needs. Neglecting to purchase flood insurance, for example, will result in uncovered losses to thousands of businesses following Hurricane Sandy. Failure to update insurance policies to reflect true rebuilding or repair costs will leave many business owners without adequate funds to recover. It’s also essential to install storm shutters and hurricane clips ahead of a natural disaster.

Moving forward

When your small business has been hit by a hurricane, recovery may seem daunting. It’s important to be aware of a number of sources to aid recovery.

The Small Business Administration (SBA) and the United States Department of Agriculture (USDA) both offer low-interest loans to help business owners repair or replace property destroyed in a hurricane. Loans are also available to those who experienced an economic loss. The Federal Emergency Management Agency (FEMA), Farm Services Agency (FSA and state governments make assistance available as well.

Economic Injury Disaster Loans, up to $2 million, can make a big difference for a business owner whose company suffered substantial economic injury as the result of disaster. The loan term is up to 30 years. The interest rate cannot exceed 4 percent if credit cannot be obtained elsewhere, or 8 percent if it can.

Physical Disaster Loans, also up to $2 million, can help a business owner repair or replace destroyed real estate, inventory and equipment. The loan rates and terms are similar to the Economic Injury Disaster Loans.

Business owners can also request tax relief from the federal government. This includes delaying tax filings and expediting refunds. FEMA will also provide free legal services for businesses to help with filing insurance claims and additional legal issues that result from the disaster.

Amazon Begins Lending to Its Sellers, Inc., the international electronic commerce giant with a cheerful smile logo, is giving many retailers another reason to grin this holiday season as they extend participation in a new short-term lending program.

Amazon Lending by Amazon Capital Services Inc. first began offering low-interest loans to their online merchants in late 2011 in an effort to stimulate growth and provide financial assistance during an otherwise challenging market.

Originally founded by Jeff Bezos in 1994 as an online bookstore, the company has diversified over the years into the world’s largest online retailer of anything and everything, including clothing, toys and electronics. Successful Amazon products include the Amazon Kindle e-book reader and Kindle Fire tablet computer.

Amazon Loan Details

Over the past few months, Amazon Lending has been approaching Amazon sellers of all sizes with installment loans ranging from $1,000 to $38,000 each. Scot Wingo, chief executive of the e-commerce advisory firm ChannelAdvisor, said in some cases, Amazon Lending extends up to $800,000 in loans to Amazon merchants.

According to online sellers interviewed by The Wall Street Journal, interest rates on these loans vary from less than 1 percent to 13.9 percent. These percentages are significantly lower than the average small business credit card interest rates, which typically fluctuate from 13 to 19 percent. Those merchants approached by Amazon Lending were said to be significant sellers of merchandise through the website. Currently, Amazon Lending is only extending loans to sellers based in the United States.

According to the lending program, those merchants approved for short-term loans receive the borrowed funds in their Amazon Seller accounts within five business days. Monthly payments are then automatically deducted from the sellers’ Amazon Seller account until the loans are paid in full.

Good for Amazon and Sellers Alike

The Amazon Lending program will further increase Amazon’s revenue. The company already collects a 6 to 15 percent commission on sales made through their marketplace as well as monthly membership fees for larger sellers. By lending to its own merchants, the company stands to earn more money as their sellers potentially gain more merchandise to market.

It is anticipated Amazon’s short-term loans will give merchants a chance to develop and flourish, especially ones new to the marketplace that may not be able to otherwise secure bank loans during a tight market. The company expects these prequalified loans to help merchants purchase inventory and ultimately increase sales, especially during the upcoming holiday season.

The Program’s Drawbacks

Some Amazon merchants, however, are hesitant to enter into a loan from a company they otherwise rely on to market and sell their products. There are concerns, for example, whether such a relationship would be too close for comfort in the event the loan goes into default. In addition, those who already pay Amazon to store, package and distribute their products fear they might ruin a good business relationship if they are suddenly unable to make payments.

Jordan Malik, founder of a product-sourcing service for merchants called, compared the short-term Amazon Lending loan to a typical car loan. If payments aren’t made, the bank can repossess the car, he said. Similarly, if a merchant is forced to default on the Amazon loan, Amazon has a connection to the seller’s account.

Those merchants who utilize additional outlets to sell products, such as eBay, have also voiced concerns about whether committing to a loan with Amazon would eventually prevent them from utilizing a different online company simultaneously in the future.

Economists, however, say access to short-term loans at a low interest rate may be the answer this holiday season, helping many small businesses increase their inventories without relying on bank loans or credit during a tight market.

Obama, Romney Tackle Tax Code, Small Businesses, Student Loans

President Barack Obama and Republican nominee Mitt Romney squared off Wednesday night in the first of three televised presidential debates. Although many voters have already made up their minds, political experts agree that the ultimate decision may fall to the small percentage of “undecideds” and “persuadables.” These voters could tip the balance in one direction or the other come November 6.

It was this group of unsure voters that each campaign attempted to reach Wednesday evening. Both campaigns understood that these voters are among the most deeply negative about the current state of the economy, as well as the most suspicious of political rhetoric. Each candidate attempted to convince this voting bloc that he is the best person to aid the middle class and jump-start the economy. In fact, the first half of the debate’s 90 minutes was devoted to the economy.

Here is a sampling of some of the salient portions of the debate dedicated to economic issues:

Tax Cuts and the Deficit

Obama wants to retire some of the Bush-era tax cuts for wealthier Americans, while Romney repeatedly stated his intention to lower tax brackets, cut deductions, all while expanding the tax base.

Obama challenged Romney’s assertions that his across-the-board rate cut could be accomplished without increasing the government’s deficit or raising taxes on middle-income people. Romney maintained that his tax changes would be revenue-neutral.

Small Business

The candidates went back and forth all night on the topic of small businesses. Romney stated: “It’s small business that creates the jobs in America, and over the last four years, small business people have decided that America may not be the place to open a new business because new business startups are down to a 30-year low.”

Later, Obama said: “Governor Romney and I do share a deep interest in encouraging small-business growth. … What I want to do is continue the … tax cuts that we put into place for small businesses and families.”

Education and Student Loans

Both candidates flaunted their commitment to education. Romney highlighted the fact that Massachusetts schools rank No. 1 in the country, while Obama touted his administration’s efforts to make college more affordable by increasing federal student aid, keeping student loan interest rates low and getting private banks out of the federally guaranteed student loan business.

Romney iterated that he was not going to cut education funding and had no plans to reduce the size or number of Pell grants offered to college students who demonstrate financial need.

Why You Should Keep Your Small Business Affairs Separate from Family Life

Keeping your small business finances separate from your family life is a smart strategy for many reasons. In fact, not separating the two is likely to cause all sorts of confusion – both for you as a small business owner and for you as the head of your household. For instance, if your company finances are mixed with your personal accounts, you really won’t know how well your business is doing, nor will you know how much money you can afford to spend on yourself and your family.

Are you paying the mortgage on your house with funds that should be going to your business’s marketing department, or canceling a vacation because you’re concerned that there will be a shortfall in your payroll? Being a small business owner is difficult enough without having to do mental gymnastics each time you pay a bill. So even though you may have begun your business with a personal loan, the sooner you can separate your business finances from your family’s, the better off both will be.

Income Taxes and Business Entities

A significant reason to separate your finances is because it will simplify your income tax computations and help you take advantage of rules for business reporting. For example, the Internal Revenue Service (IRS) allows you to write off certain business expenses, but only if they are clearly delineated from personal ones. This is especially important if you are using a room in your home as your main place of business and intend to deduct its costs on your tax return.

In addition, if your business and family finances are one and the same, it may be more difficult for you to get a business loan. Lenders are not interested in extending credit to finance what could appear to them as a hobby. If you wish to be taken as a serious small business owner, you need to present yourself as such. At the very least, you should get a separate tax identification number (TIN) for your business, and not use your personal Social Security number for tax reporting purposes.

You could also establish your business as a limited liability company (LLC), or an S Corporation. These business entities put a legal boundary between your business and your family, so your personal finances are protected against confiscation, should your business ever get sued. Conversely, if creditors are going after you for debts owed on your personal account, your business funds cannot be taken to settle them.

Also, it’s important to remember that you are not always the only person involved in either your business or personal finances. A spouse may have equal access to your checking account and without knowing it, spend funds that you were planning to use for your business. The same may hold true for a business partner or employee who is authorized to pay vendors, and without realizing it, puts your personal account into the red because you’ve just written a large check for an unforeseen home repair.

Separate Your Accounts

The first thing that you should do is set up a separate checking account for your business. Open the account with a DBA (Doing Business As) designation and have the business’s name printed on the checks. Next, get and use a business credit card under the same DBA. The separate checking account and credit card will help your record-keeping and give you an added tax deduction at tax time.

Separate your accounting systems, as well, with one for personal finances and one for the business. This will improve your overall organization and make tax filing easier. Once you have completely severed your business account from your family finances, consider paying yourself a salary. This will make it easier for both your family and your business finances to stay on track.

You may not be able to entirely separate certain items – like a cell phone or an automobile – from your personal or family use. In these cases, it’s important to keep careful logs as to when you are using one or the other for business. Remember: Business travel and business phone calls are tax deductible, while personal travel and personal telephone use are not.

Small Businesses Show Recent Signs of Recovery

There is good news for small business owners and entrepreneurs considering a new venture — lenders are steadily increasing their volume of small business loans.

In May, the overall number of loans to small companies grew 12 percent, the largest month-to-month increase in three years.

The Thomson Reuters/PayNet Small Business Lending Index, which calculates the overall volume of financing to small American companies, increased to 108.4, a substantial increase from the previous 96.6 reported in April.
Since the economic downturn in 2008, small businesses have struggled to finance their endeavors and establish lines of credit as lenders were often hesitant to commit.

Reports currently indicate, however, a significant increase in lending as both large and small banks commit to the growth of small businesses.

Banks Lending, Credit Unions Want to Lend More

Several big banks have recently made a strong effort to support the small business arena. For example, both Chase and Citi banks reported larger small business loan volume over the past year.

Chase stated its amount of loans extended to small businesses was up 52 percent from 2010, with $17 billion in loans in 2011. Last year, they reported that more than 400,000 new loans and lines of credit were established to small businesses.

Citi said it increased its loans more than 30 percent from the previous year and committed $7.9 billion to small companies last year. In September 2011, Citi pledged to lend $24 billion to small businesses over the span of three years.

Small bank lending is also on the rise. It increased to 47.5 percent in June, two points higher from the previous month and five points higher year over year.

Financial experts are especially optimistic about the marked increase in lending as the first four months of 2012 originally showed a substantial decrease overall in small business loans.

In June, several credit unions reported they had reached their yearly spending limits, which is 12.5 percent of their total assets. Sen. Mark Udall (D-Colo.) introduced the Credit Union Small Business Jobs Bill to raise the credit union lending cap to 27.5 percent.

According to Biz2Credit Small Business Lending Index, which analyzes 1,000 applications month to month, big-bank approvals increased half a percentage point in June to 11.1 percent. In June 2011, the approval rate was a mere 8.9 percent.

Fewer Businesses Behind on Loan Payments

Other PayNet data revealed that fewer businesses are behind on their existing loan payments, another positive sign for the economy as it may continue to strengthen the ability for businesses to borrow in the future and grow.

Delinquent small business loans have decreased – another positive indicator for the future. Data indicated that business owners behind in payments by 30 days or more lessened to 1.18 percent in July from 1.28 percent in April.

This is a significant change from May 2009 when the percentage of businesses behind on payments reached 4.41 percent.

Those accounts considered delinquent at 90 days or more overdue, dropped from 0.34 percent to 0.29 percent within the same time frame. Small business loans in default and deemed unlikely to be repaid went from 0.44 percent to 0.40 percent.

Borrowing is also up 18 percent from May 2011, which suggests small business owners are requesting and securing the financing they need to grow their businesses or hire more workers. Analysts are hopeful the change is a sign of strong economic growth.