SKOKIE, Ill. — Small-business borrowing shot up in October, according to PayNet Inc., indicating that the economic recovery is gaining momentum.
The Thomson Reuters/PayNet small-business lending index is correlated to developments in the overall economy, with changes in the index preceding changes in the overall U.S. economy by two to five months. The small-business lending index rose 19% in October from a year earlier.
This is the third straight double-digit jump in the index. The loans are used to finance investment in factories and equipment, which could lead to future hiring, says William Phelan, PayNet’s president and founder.
PayNet’s figures also suggest that small businesses had already ramped up borrowing efforts before the federal government’s recent purchase of $600 billion in Treasuries to stimulate the economy.
More good news: PayNet data shows fewer companies are falling behind on their existing loan payments. Accounts in severe delinquency (90 days or more behind in payment) dropped slightly in October from September, and accounts in default and unlikely to ever get paid (180 days or more behind in payment) also fell slightly in October from September.
PayNet collects real-time loan information from more than 200 U.S. capital equipment lenders.