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Canadian small business lending slips in Aug-PayNet

Published 2015-10-14, 05:00 a/m
Canadian small business lending slips in Aug-PayNet

OTTAWA, Oct 14 (Reuters) - Commercial borrowing by small
businesses in Canada edged lower in August, data from PayNet
showed on Wednesday, as companies adjust to the impact of
cheaper oil prices on the country's economy.
PayNet's Canadian small business lending index slipped to
128.7 from 130.5 in July. Its index of medium-sized businesses
also retreated, declining to 218.1 in August from 229.5 the
previous month.
The decline in borrowing from the medium-sized businesses
was less surprising because those are firms that are tied to the
energy sector, said PayNet's president Bill Phelan. But the fall
off for smaller companies was unexpected.
"It was kind of a surprise because it really means there was
a little bit of a step backwards," Phelan said. At just 2
percent growth for small business borrowing compared to a year
ago, that barely keeps up with replacement needs for worn out
equipment or properties, he said.
Borrowing trends across sectors suggested growth was
shifting away from areas related to energy and to more
consumer-oriented industries.
The borrowing index for companies in accommodation and food
jumped to 272.8 from 265.5, while manufacturing edged down to
60.8 from 61.1.
"That means that there's this underlying consumer strength
in the Canadian economy," said Phelan. "It points to this shift
... it's a bumpy road to shift, it always is, but at least it's
shifting into the consumers' hands."
Loan delinquencies edged down in another positive sign.
Moderate delinquencies - those that are behind in payments
by 30 days or more - edged down to 1.07 percent from 1.08
percent. Loans that were more than 90 days late similarly
declined to 0.32 percent from 0.34 percent.

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