Commercial borrowing by small businesses in Canada accelerated in September, data from PayNet showed on Monday, in a sign that activity is shifting from big companies to small companies.
PayNet's Canadian small business lending index rose to 142.0 from 131.8 in August. Compared to the same month a year ago, the index rose 14%, accelerating from a 5% rise in August.
"We are seeing that the small businesses are becoming an engine of growth for the Canadian economy at a time when the big companies, some of them in the energy sector, are contracting," said PayNet's president Bill Phelan.
He said small businesses "are a good leading economic indicator, so that bodes well for future GDP rising from the small businesses economic expansion."
In contrast, PayNet's index of medium-sized businesses, which is more tied to the energy sector, fell to 213.6 in September from 220.7 in August.
What's more, its decline accelerated, falling 12% compared to the same month a year ago, versus a 7% drop in August.
Borrowing trends across sectors were consistent with growth shifting away from areas related to energy and to more consumer-orientated industries.
Compared to the same month a year ago, the borrowing index for businesses in accommodation and food rose 16%, while professional services rose 36% and manufacturing saw an encouraging swing to 2% growth after having fallen 3% in August.
Phelan also highlighted low impaired loans which leave businesses with the financial strength to invest more.
The Canadian small business delinquency index for 30 days or more fell to 0.92% from 1.04% in August.
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