Small Business in the U.S. See a Slight Rise in Borrowing Costs

“SAN FRANCISCO (Reuters) – Borrowing by small U.S. businesses rose marginally in December, eking out a tiny gain for the year and suggesting headwinds for economic growth for the first few months of 2013, a report on Monday showed.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, rose to 112 from an upwardly revised 111.1 in November, PayNetsaid.

Borrowing was up just 1 percent from a year earlier.

PayNet had initially reported the November figure as 108.3.

PayNet founder Bill Phelan, located in Chicago, said the index suggests small businesses “haven’t come out of their shell.” PayNet’s lending index typically correlates to overall economic growth one or two quarters in the future.

“It’s underwhelming,” he said. “The next two to five months are going to be pretty slow.”

Small businesses are often responsible for the bulk of new job creation after recessions. The recent recession ended in 2009, but sluggish growth has meant weak job growth, and unemployment in January rose to 7.9 percent….”

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