Apr. 2 - Small business borrowing grew only two percent in February from a year ago, in a sign firms are skeptical about future growth prospects. Conway G. Gittens reports.
The Daily Digit is 2 percent. That's how little small business borrowing grew in February from a year ago, according to the Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies. Two percent is the slowest year-on-year increase since September. And it shows firms cut back on borrowing for a second straight month. PayNet President and Co-Founder Bill Phelan says businesses are trying to figure out whether now's the right time to expand. SOUNDBITE: BILL PHELAN, PAYNET PRESIDENT AND CO-FOUNDER (ENGLISH) SAYING: "Growth is continuing. That's the first thing. But, more importantly, we're seeing a slower pace of growth. And then the other issue here is, you can see in the data, that the small businesses are not entirely convinced that they should invest heavily or go all in, an expansion. That's even though the credit risk is at all-time lows. But we're seeing that some of the most economically-sensitive credit sectors are starting to show some stress." Those sectors include transportation, considered a bellwether of where we are in the economic cycle because of its wide connections to other industries. SOUNDBITE: BILL PHELAN, PAYNET PRESIDENT AND CO-FOUNDER (ENGLISH) SAYING: "When you see the truckers, you know, starting to exhibit some financial strain, it's just, it's an indication that they're having a little bit harder time paying their bills." Phelan also says small businesses are looking for some clear directions from Washington when it comes to forced spending cuts. In the meantime, hiring is stalled. SOUNDBITE: BILL PHELAN, PAYNET PRESIDENT AND CO-FOUNDER (ENGLISH) SAYING: "We know that every point in the index means 42,000 jobs, and, with that two percent rate, we don't think we're going to get a whole bunch of aggressive growth in employment, at least in the small business sector." The PayNet data provide a counterpoint to generally positive signals from the broader economy, including a rise in consumer spending and sentiment, and continued growth at U.S. factories.