(Reuters) - Borrowing by small businesses jumped in October, data released by PayNet Inc on Wednesday showed, evidence the recovery was gaining momentum even before the Federal Reserve's latest round of monetary stimulus.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small businesses, rose 19% in October from a year earlier, PayNet said.
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It was the third straight double-digit jump in the index. The increase in such loans, used to finance investment in factories and equipment, points to future hiring, said William Phelan, PayNet's president and founder.
"As property, plant and equipment gets added, you need people to run these things," Phelan said in an interview. "This is a show of strength."
The nation's stubbornly high unemployment rate, along with falling inflation, drove the Fed this month to begin buying $600 billion in Treasuries to help stimulate the economy.
The purchases are intended to lower borrowing costs, making it easier for firms to take on new loans and invest in plants, equipment and, eventually, new employees.
Small businesses are particularly important to the economy because they account for most of the nation's new hiring.
PayNet's figures suggest small firms were already boosting borrowing before the latest round of Fed easing. Other recent economic data has also pointed to a firming of the recovery, and the government is set to release data on Friday that is expected to show the economy added another 140,000 jobs in November.
Separate data released by PayNet on Wednesday showed that fewer companies are falling behind on their existing loan payments, another positive economic sign.
Accounts in moderate delinquency, or those behind by 30 days or more, fell in October to 2.65 percent from 2.69% in September, PayNet said.
Accounts 90 days or more behind in payment, or in severe delinquency, fell to 0.74% in October from 0.79% in September.
Accounts behind 180 days or more, or in default and unlikely to ever get paid, fell to 0.82% of total receivables in October, from 0.83% in September, according to PayNet, which provides risk-management tools to the commercial lending industry.
The Thomson Reuters/Paynet small business lending index is correlated to developments in the overall economy, with changes in the index preceding changes in the overall economy by two to five months.
PayNet collects real-time loan information, such as originations and delinquencies, from more than 200 leading capital equipment lenders.