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* Canadian business lending index rises 5 pct in Q3 from Q2 * Borrowing rises 20 percent year over year * Sector growing twice as fast as U.S., says PayNet * Commercial loan delinquencies fall in 3rd quarter By Claire Sibonney TORONTO, Dec. 12 (Reuters) - Commercial borrowing by Canadian companies hit the highest level in the third quarter since early 2009, a PayNet survey showed on Wednesday, suggesting businesses played an outsized role in supporting the economy as growth cooled. PayNet, which tracks commercial financing to millions of North American small and medium-sized businesses, said its Canadian Business Lending Index rose 5 percent from the second quarter and 20 percent year-over-year. "We're seeing persisting capital expenditures and low risk in the market place right now, so it bodes well for the Canadian economy," said Anthony Zambon, director of PayNet Canada. "If capital is the engine of growth in Canada, we're seeing that the Canadian economy will keep growing over the next three to five months." The index rose to a reading of 172, its highest level since the first quarter of 2009. PayNet said its Canadian index is rising twice as fast as the corresponding U.S. index. The index marked an eighth consecutive quarter of growth since bottoming in 2010 and the fifth straight double-digit advance on a year-over-year basis. Still, Zambon said the pace of growth had eased compared with the second quarter when lending activity notched an 8 percent rise over the prior quarter and a 21 percent gain year-over-year. The commercial lending sector includes independent finance companies, big banks and non-bank players such as machinery makers, whose loans and leases to customers are secured against the equipment sold. The report, which tracks lending across a broad range of sectors including manufacturing, retail and transportation, offers the latest evidence of an uneven economic recovery. Zambon noted that anecdotal preliminary data for the fourth quarter suggests lending growth could continue to slow. Official government data last month showed the Canadian economy grew at a weaker-than-expected 0.6 percent annual rate in the third quarter as exports fell at the fastest pace in more than three years, business investment sputtered and the housing market cooled. Meanwhile, domestic trade data and jobs numbers over the past few days came in better than expected. FINANCIAL STRESS EASES Other PayNet data released on Wednesday showed a fall in loan delinquencies, a gauge of financial stress, to a record low. Moderate loan delinquencies - defined as those being late by 30 days or more - were down to 1 percent in September from 1.21 percent of total loans in June. It marked the lowest level in the survey's nearly eight-year history. Bill Phelan, PayNet's founder, said the lenders he meets have told him these are the lowest delinquency numbers that they've seen in 30 years. Severe loans in arrears - those behind more than 90 days - also fell in September, to 0.33 from 0.41 percent three months earlier. These longer loan delinquencies were the lowest since early 2007. Businesses "are being cautious with regards to investment and it could really be the new standard," added Zambon. "They're being smart about their investing, they're being smart about when they acquire new equipment, they don't want to be stuck with unproductive assets on their books."