Exclusive: Business borrowing signals Canadian growth: PayNet

Thu Dec 15, 2011 9:07am EST
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By Claire Sibonney

TORONTO (Reuters) - Canadian commercial lending growth accelerated in the third quarter, showing smaller businesses expanded even as Europe's deepening debt crisis rattled investors worldwide, according to a PayNet Inc report.

PayNet, which tracks commercial financing to thousands of small and medium-sized companies, said on Thursday its Canadian Business Lending Index rose 6 percent from the second quarter and 13 percent year over year.

It was the first quarter of double-digit year-on-year growth since early 2008.

The quarter-over-quarter jump was the biggest since the beginning of 2007, before the global financial crisis knocked the economy into recession.

The commercial finance sector includes non-bank players such as machinery makers, whose loans and leases to customers are secured against the equipment sold.

"The Canadian economy is making a big comeback," William Phelan, PayNet's president and founder, said in an interview.

"There's some underlying strength here that's not being reported elsewhere. It's not showing up in the sentiment indices, it's not showing up in the stock market but it is showing up in this very large portion of the GDP for the Canadian economy."

The rise in Canadian commercial lending bodes well for fourth-quarter growth prospects.   Continued...