US small busi­ness bor­row­ing at low­est level since 2014: PayNet

The Pak Banker - - 6BUSINESS -

NEW YORK: U.S. small busi­ness bor­row­ing fell 13 per­cent in Jan­uary to the low­est level in more than a year, data re­leased on Tues­day showed, a fresh sign that eco­nomic growth could weaken in the com­ing months.

The Thom­son Reuters/PayNet Small Busi­ness Lend­ing In­dex reg­is­tered 118.2 in Jan­uary, the low­est level since Novem­ber 2014. The PayNet in­dex typ­i­cally cor­re­sponds to U.S. gross do­mes­tic prod­uct growth one or two quar­ters ahead.

"This is a dra­matic form, an ex­treme form of hun­ker­ing down," said Bill Phe­lan, pres­i­dent of PayNet, not­ing that Jan­uary's level of bor­row­ing is not even enough to re­place wornout equip­ment, let alone buy new ma­chines.

Small busi­ness bor­row­ing is a key barom­e­ter of growth be­cause lit­tle firms tend to do much of the hir­ing that fu­els eco­nomic growth. The delin­quency rate on loans more than 30 days past due is also show­ing "a lit­tle bit of ero­sion," Phe­lan said. The de­fault rate rose in Jan­uary to 1.48 per­cent, the high­est per­cent­age since June, sep­a­rate data from PayNet showed. PayNet col­lects real-time loan in­for­ma­tion such as orig­i­na­tions and delin­quen­cies from more than 325 lead­ing U.S. lenders.

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