Businesses Ramp Up Borrowing Levels

According to a new survey, small business borrowing increased at a record rate in May, driving a key economic index to its highest level since pre-recession 2008 and indicating the economy could begin growing at a quicker pace in the months ahead. The Thomson Reuters/PayNet Small Business Lending Index rose 26% in May from a year earlier, PayNet Inc. said on Thursday. The index measures the volume of financing to U.S. small businesses.

The spring upsurge means the index is now at its highest level since July 2008, two months prior to theLehman Brothers’ collapse and the descent into worldwide recession. "If small businesses are taking these kind of chances, taking risks, making long term investments, they are seeing some long-term opportunities on the horizon," said PayNet founder Bill Phelan. "That's got to be a big positive sign for the economy."

Separate data also released on Thursday showed small business loan defaults at their lowest level in five years, tying records set in April and May 2006.