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Business borrowing, how does it affect the economy?
Of all the indicators of the economy's future growth, the volume and change in the level of business borrowing stand out as significant barometers of future economic activity. Business borrowing is typically for expansion purposes. Banks do not easily grant loans solely to cover payroll expenses, especially not on a recurring basis. Banks lend money primarily to entities that do not urgently require the loans. To be fair, banks are also businesses themselves and must ensure a reasonable certainty of debt repayment.
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