Reuters reported that borrowing by U.S. small businesses edged up in August, pushing an index of borrowing to a six-year high, citing the Thomson Reuters/PayNet Small Business Lending Index.
PayNet said the Canadian Business Lending Index, which measures the amount of new private investment in property, plant and equipment, jumped 26% to a new all-time high since its inception.
According to a recent PayNet study, rising interest rates mean more investment by small businesses, not less. The rise in interest rates has a minor impact on the financial risk of small businesses, so failure rates will rise only slightly, PayNet said.
PayNet’s latest analysis of small business investment points to modest growth in the coming months.
After stepping backward in Q1/13, small business investment jumped forward in the last two months, according to the Thomson Reuters/PayNet Small Business Lending Index.
The Thomson Reuters/PayNet Small Business Lending Index increased 17% in April over the same month last year, but it is only slightly higher than the March reading, suggesting that small business investment remains sluggish, PayNet said.
Reuters reported that commercial borrowing by small and medium-sized businesses in Canada climbed in Q1/13, driven by strong domestic and global demand, citing a PayNet survey.
PayNet said small business owners lack a bullish outlook on business expansion, as the Thomson Reuters/PayNet Small Business Lending Index decreased to 98.5 in March from a revised 105.4 in February.
PayNet announced the PayNet Small Business Delinquency Index, a new economic index that quantifies small business financial stress and default and provides early warning of future insolvency.
PayNet said that the Thomson Reuters PayNet Small Business Lending Index has been flat for the past year, confirming the economy’s failure to reach its full potential primarily as a result of small businesses’ reluctance to expand.