Small Business Lending 'Finally Turning The Corner': PayNet

(By Deborah L. Cohen) - Startup activity is expected to pick up this year and into 2012 as sectors such as amusement and recreation services continue to add new businesses, helping reverse four years of declines.

That's according to new data based on lending activity from PayNet, which also showed the rates of startup activity decreased by 2 percent in 2010 from the year earlier.

"We're finally turning the corner," said William Phelan, the president and founder of Chicago-based PayNet, which tracks loan information from the country's largest small business lenders. "We're starting to see net new startups emerge. Jobs will eventually come from those startups."

PayNet estimates that some 200,000 to 300,000 net new companies will be created this year, as the rate of business failures drops, Phelan said.

The amusement and recreation sectors, which include bars, restaurants, and travel-related services, generated the highest number of new businesses last year.

"People are sick of being down and they're just enjoying themselves more," Phelan said. "That's a natural reaction during a recession."

Startup additions also came from real estate services, including companies to process high numbers of foreclosures, and agricultural services, including those that help U.S. farmers support the ethanol industry and ship more grain overseas to emerging markets, Phelan added.

Sectors with the largest decrease in 2010 startup activity included furniture, home-furnishing stores, insurance agents and brokers, and retail food stores, PayNet data found.