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The Thomson Reuters/PayNet Small Business Lending Index dropped
a third straight month in April to 123.1, down 5 percent from
last April and the lowest level since October.
Movements in the index typically correspond with changes in
gross domestic product growth a quarter or two ahead. The U.S.
economy grew at a 1.2 percent annual pace in the first quarter,
though the Atlanta Fed currently projects second-quarter
expansion at a brisk 3.8 percent pace.
A separate barometer of small companies' financial health
suggests companies having more trouble paying off old loans. The
share of loans more than 30 days past due was 1.7 percent in
April, the highest rate in more than four years, PayNet data
showed.
"That's a bad cocktail: falling investment and rising loan
delinquency," said Bill Phelan, PayNet's chief executive and
founder. "It certainly is going in the wrong direction."
Though still well below the crisis-era peak of 4.7 percent, the
rise suggests an erosion in financial health that could spell
trouble for future borrowing.
Healthcare was hit particularly hard, with borrowing falling 14
percent in April as the young Trump administration struggled to
deliver on a promise to replace Obamacare with a new health
insurance system.
Small business borrowing is a key barometer of growth because
small companies tend to do much of the hiring that drives
economic gains.
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 Chizu Nomiyama)
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