November 17, 2017 / 10:06 AM / a year ago

Canadian small business lending slows in September: PayNet

OTTAWA (Reuters) - Lending to Canadian small businesses cooled in September after climbing earlier in the year, according to data released on Friday that was in line with an anticipated slowdown in broader economic growth in the second half of 2017.

The PayNet Small Business Lending index declined to 112.0 from a downwardly revised 115.8 in August, which was down slightly from a previously reported reading of 121.2.

Borrowing by medium-sized businesses also waned, with the measure falling to 224.9 in September from 238.6 the previous month.

After climbing strongly from February to May, the small business index has since given up ground and is now down 4 percent compared to a year ago.

“There was some really heavy duty growth earlier in the year and that’s not sustainable,” said PayNet President Bill Phelan.

“I think it’s more of a pause than anything and the core segments are still strong,” Phelan said.

Among the standouts, the measure of lending in the transportation sector rose to 92 from 90.4, while accommodation and food increased to 199.3 from 196.1.

Manufacturing was one of the weaker sectors, slipping to 58.8 from 59.5.

The Canadian economy is expected to see a slower pace of growth in the last six months of 2017 after a strong performance earlier this year put it at the top of the Group of Seven.

Companies’ financial health still appeared solid, with the number of small businesses that were 30 days or more delinquent on payments decreasing slightly to 0.91 percent from 0.92 percent.

The number of companies that were 90 days or more behind also decreased, dipping to 0.29 percent from 0.31 percent.

Reporting by Leah Schnurr, editing by G Crosse

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