PayNet, an organization that provides risk management tools to investors and commercial lenders by gathering and interpreting real time loan information, just declared their discoveries that those who are considering the investment on junk bonds need to think twice before they do and should rather direct their attention on small business loans. A research showed that in the high yielding security industry, SBA loans are less dangerous than junk bonds.
PayNet further says that the small business loans are still expected to yield better income in the approaching years. President and Founder of PayNet, William Phelan, mentioned in an interview that the default rates on SBA loans since 2006 discloses only an average rate of 6.9% in comparison with speculative grade bonds which has a better average rate by 12.9%.
The new numbers should encourage small business investments and also boost the confidence of small business investors in America. In the same manner, this data should improve the readiness of banks to lend to eligible small business loan applicants.
The said small business loan defaults are still estimated to reduce to 4.6% this fiscal year and further fall to 3.9% in the coming year. These numbers were according to an evaluation done by Stanford University School Professor Darell Duffie.
Small business loans less risky than junk bonds: PayNet
