Small business loans in New Jersey have increased 35 percent in the past year, and experts say that's a good sign for our economy.  

Small business loans are increasing in NJ. (NuStock, ThinkStock)

Rutgers economist James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy, said companies employing between five and 25 workers -- such as "mom and pop" businesses -- are the biggest job creators, and their thirst for new capital is a positive.

"When they are doing well it means that consumers are doing well and big business is doing well," he said. "We are talking a whole range of small businesses, whether it is a plumbing supply organization, any type of small construction operations, catering operations. But a whole range of economic activities and essentially small businesses really serve both consumer markets and big business markets."

Hughes also says lending in New Jersey has been hampered by increased regulation and by what needs to be done to process a loan.

"I think that they are learning to cope with that," he said, adding that the other factor that had been inhibiting lending was weak borrowers.

Hughes believes this suggests that businesses who are borrowing have stronger businesses, which leads banks to have more confidence in them.

"It suggests that the economy is getting stronger, not as fast as we would like, but steady as she goes," Hughes said.

The average small business loan in New Jersey in the past year was $473,000. That was down slightly, on average from the $478,000 the year before, according to the U.S. Small Business Administration.

Eighteen of New Jersey's 21 counties saw increases in SBA loan approvals. Bergen County saw the most small business loan activity with 238 loan approvals, followed by Monmouth County with 142 business loan approvals.

"Monmouth is a special case, I think -- really a post-Sandy situation. But Bergen is really one of the big guys," Hughes said.

The biggest lender for small businesses in the state was TD Bank with 212 SBA loans, totalling $28.8 million, followed by Wells Fargo, with 146 loans, totalling $28.2 million.

Additional information about The Small Business Administration's lending programs can be obtained at www.sba.gov/financing.