U.S. small business borrowing sank in 2015: PayNet

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[February 01, 2016]  By Ann Saphir

(Reuters) - U.S. small business borrowing fell in December from a year earlier, data released Monday showed, a fresh sign that economic growth may weaken in the coming months.

The Thomson Reuters/PayNet Small Business Lending Index registered 132.4 in December, up from a downwardly revised November reading of 127.3 but below the December 2014 reading of 134.1. Lending had risen sharply earlier in the year.

"What started as a full gallop in 2015 is barely trotting along now," said Bill Phelan, President of PayNet. "We are barely replacing worn-out assets here."

Dropping oil prices and slowing world growth are taking a toll on U.S. economic growth, which slowed to a 0.7 percent annual pace in the last quarter of 2015.

Small business borrowing is a key barometer of growth because it is the little firms that tend to do much of the hiring that fuels economic growth.

Lending slowed sharply to small businesses in mining and agriculture, as well as in wholesale trade, transportation and construction, the figures showed. Texas was particularly hard hit.

The PayNet index typically corresponds to U.S. gross domestic product growth a quarter or two ahead, with Monday's figures spelling further slowing but probably not recession in the first part of this year, Phelan said.

The delinquency rate on loans more than 30 days past due ticked down in December to match a record low of 1.44 percent, separate data from PayNet showed.

Small businesses "are settling in for a long time in waiting for what they view as a difficult situation to come to an end," Phelan said. "I don't think it's time to break the glass and pull the alarm yet, because financial health got better."

PayNet collects real-time loan information such as originations and delinquencies from more than 325 leading U.S. lenders.

(Reporting by Ann Saphir; Editing by James Dalgleish)

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