TORONTO May 16 Commercial borrowing by small and medium-sized businesses in Canada fell in the first quarter, hurt by higher moderate loan delinquencies and sluggishness in the transportation and wholesale industries, data from PayNet showed on Friday.
PayNet, which tracks commercial financing for millions of North American small and medium-sized businesses, said its Canadian Business Lending Index slipped to 220 in the first quarter, from 222 in the previous quarter.
It was its first quarter-over-quarter drop since the third quarter of 2010. Though the reading grew 13 percent from the first quarter of 2013, it was the weakest increase since the third quarter of 2011.
"Canadian businesses have definitely slowed down their investment in capital expenditures in the first quarter," said Anthony Zambon, director of PayNet Canada.
"Risk has returned," he added. "It means that these businesses that invested in machinery and equipment are facing harder times."
Higher risks were taken in the last two years, and "what we're seeing now is that the risk-taking is having a corresponding effect in increasing delinquencies," Zambon said.
The three-month average for moderate loan delinquencies - those that are behind in payments by 30 days or more - went up to 2.03 percent of loans in the first quarter of 2014, from 1.14 percent in the year-ago period.
"It is the first time since the index's inception in 2005 that the moderate loan delinquency has clearly been above the U.S. level," Zambon said.
Loans that were more than 90 days late climbed to 0.43 percent in March 2014, from 0.24 percent in December 2013. (Editing by Eric Walsh)