Borrowing by small US businesses rose in March, data released by PayNet Inc on Monday showed, but at a slower pace than in recent months as the US recovery cools. The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to US small businesses, rose 12 percent in March from a year earlier, PayNet said. The index rose 17 percent in February.
But separate data also released on Monday show small business loan defaults at their lowest in four and a half years. "Small business balance sheets are pristine right now," William Phelan, PayNet's president and founder, said in an interview. "There's a lot of potential out there (for growth), but we need to see the demand come back to ignite it."
Borrowing by small businesses is seen as harbinger for the broader economy because they account for as much as 80 percent of new hiring. The loans PayNet tracks are typically used to buy or update plants and equipment.
US consumer spending rose in March, data on Friday showed, but prices also rose, leaving the spending that drives 70 percent of the economy up just 0.2 percent after adjusting for inflation. Manufacturing in the US Midwest grew slower than expected in April, a separate report on Friday showed. Separate data released by PayNet on Monday showed that fewer companies are falling behind on their existing loan payments.
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