Fears of a double dip recession appear to be subsiding, at least according to the Thomson Reuters/PayNet Small Business Lending Index.
The monthly index, which measures the overall volume of financing to small businesses, rose 15 percent in August from the prior year.
That’s the fastest gain since March 2006, marking the highest level of borrowing tracked by the index since December 2008.
Company President William Phelan said the increase in borrowing was not confined to any one industry but was broad-based and showed signs of growth.
The surge in borrowing by small businesses, seen as a harbinger for the broader economy because they account for as much as 80 percent of new hiring, comes amid other signs the economy is headed for renewed expansion.
In addition, new claims for jobless aid fell last week, and manufacturing in the Midwest grew faster than expected in September.
In related news, separate data released by PayNet showed that fewer companies are falling behind on loan payments.
That trend could boost borrowing, since higher repayment rates can free up capital that lenders might have otherwise set aside against the possibility of default.
Account delinquencies – another bellwether of the economy – also saw improvement.
Those in moderate delinquency or behind by 30 days or more, fell in August to 2.77 percent from 2.93 percent in July, PayNet said.
Accounts 90 days or more behind in payment, or in severe delinquency, fell to 0.84 percent in August from 0.91 percent in July.
Accounts behind 180 days or more, or in default and unlikely to ever get paid, fell to 0.83 percent of total receivables in August, from 0.87 percent in July, according to PayNet, which provides risk-management tools to the commercial lending industry.