(Reuters) – Small businesses cut back on borrowing a third straight month in March, all but reversing a short-lived surge after the Federal Reserve launched its asset-buying program aimed at boosting growth and jobs.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, fell to 98.5 from an upwardly revised 105.4 in February, PayNet said on Wednesday. PayNet had initially reported the February figure at 101.3.
Business borrowing can point to trends in growth and employment, because when small firms take out loans they generally spend the money on new tools, factories and equipment. Such capital investment can be a prelude to new hiring.
Historically, PayNet’s lending index has correlated to overall economic growth one or two quarters in the future.
