Why Another Economic Downturn May Be On The Way

Paynet economic downturn
Reading Time: 2 minutes

Ever since America emerged, wide-eyed and a little battered from the recession, businesses have feared the dreaded double dip.

Small business lending is down. Economic indicators are weak. Everywhere you turn, people are a little more dour about the economy than they were a few months ago. That would seem to portend bad things.

The most alarming piece of news is what would happen if a second recession did arrive, with Paynet predicting some 6% of all American small businesses would fall on hard times or fail. At this point, it’s hard to predict the economy suddenly bouncing back.

Dire news? In some ways, yes, but we’re a long way away from knowing if a double dip recession is coming. Even if it is, there’s reasons to believe your average small business will fare better than last time around.

Lenders like Direct Capital are still plenty capable of providing financing for businesses—even if others are reluctant or completely unwilling—and at Direct Capital we’re actually growing by leaps and bounds. We hear from small businesses on a regular basis who are as strong now as they’ve ever been, and have positioned themselves to weather a storm with new equipment that has been paid off thanks to smart equipment financing and working capital loan* usage. There’s also a sense that a recession might be shorter this time around, even if it hits, which is at least mildly comforting.

Despite Paynet’s numbers and a decline in business confidence, most small businesses in America today are doing much better than they were a few years ago. It may be that what we’re seeing now is akin to Halley’s Comet for the ancients: A false harbinger of doom.

We can’t predict the future, of course, so let’s open this up for discussion. Do you think another recession is coming?


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*Working capital not available in the following states: AK, DE, ND, VT