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Taking the RiskOut of Small

Business Lending

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PayNet and PayNet AbsolutePD are registered trademarks of PayNet, Inc.PayNet AbsolutePD Outlook is a service mark of PayNet, Inc.

C&I’s Gonna Take Time

RMA Chapter Leaders ConferenceJune 23, 2017

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Staying Alive

• C&I Borrowing Soft

• Defaults Rising

• Lending Efficiency via fintech

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REALITY 1: Governing is Hard Work

EPADodd Frank

ACAInfrastructure

Program

Business Tax Rate

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REALITY 2: Good Things Take Time

2012

61-101

2016

103-58

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REALITY 3: Stocks A Bit Ahead of Themselves

S&P 500 +16.9% since the election

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REALITY 4: Private Businesses Remain Cautious

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Patience is the Word

If solid measures can be enacted to…

Private Businesses are Positive……But they Doubt Policies will Change Quickly

…They are realists About Cash Flow…Banks Focus on Tech to Lower Lending Costs

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Credit Risk Outlook for C&I in 2017

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The Business Cycle

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100

120

140

80

60

IndexValue

‘13 ‘17‘09 ‘11‘05 ‘07 ‘15

Recent Investment Activity

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Credit Risk

2%

1%

0%

3%

4%

31-90DaysIndex

‘13 ‘17‘09 ‘11‘05 ‘07 ‘15

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Regional Analysis

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Regional Analysis

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Growth Sectors

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Lagging Sectors

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Industry

Transportation

Construction

Agriculture

Manufacturing

All Industries

Probability of Default Forecast

2009

12.8%

10.4%

2.8%

6.0%

6.3%

2016

4.1%

2.1%

2.1%

1.8%

1.8%

2017

4.5%

2.4%

1.7%

2.0%

2.1%

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AbsolutePD Forecasts Defaults Will Rise in 2017

RESULTING IN BUSINESSES TAKING MORE RISK

ACCELERATION IN LOAN DELINQUENCIES

RISING CREDIT RISK IN SEVERAL KEY INDUSTRIES

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Defaults Will Rise in 2017

RESULTING IN BUSINESSES TAKING MORE RISK

• Acceleration in loan delinquencies

• Rising credit risk in several key industries

• Accelerating economy + rising interest rates

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Fintech – Prepopulated Credit Memo

>

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Fintech - Credit Review

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William Phelan

SBInsights.paynetonline.com/resources(866) 825-3400

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