U.S. small business loans still under pressure: PayNet

CHICAGO (Reuters) - Delinquent loans at small and medium-sized U.S. businesses continued to rise in February, according to PayNet Inc, a firm that tracks trends in the commercial lending market.

In each of the three broad categories of delinquencies tracked by PayNet, accounts behind in payment hit a new high for the current U.S. economic recession.

Accounts in moderate delinquency, or behind in payment by 30 days or less, rose to 4.45 percent in February from 4.2 percent in January, the firm reported. A year ago that measure stood at 3.48 percent.

Accounts up to 90 days behind, or in severe delinquency, rose to 1.29 percent in February from 1.23 percent and from 1.04 percent a year earlier.

Those 180 days delinquent, or in default, were 0.63 percent against 0.62 percent in January and 0.34 percent in February 2008.

"Privately held medium and small business firms, from farmers to small construction to accounting to medical practices, are hurting," Bill Phelan, PayNet's president and founder, told Reuters in a telephone interview.

"The United States is still on the negative side of the business credit cycle, and it's picking up speed."

PayNet, based in Skokie, Illinois, collects real-time loan information, such as originations and delinquencies, from more than 200 leading U.S. capital equipment lenders.

The company's proprietary database encompasses more than 90 million current and historic contracts, worth more than $600 billion.

More than half the money invested in plants, equipment and software in the United States in any given year is financed with loans, leases and lines of credit.

Phelan said that if moderate delinquencies continued to rise for the rest of 2009 and the same rate seen in January and February, they could hit 8.0 percent, above the high of 7.0 percent in 2002.

Among specific sectors, construction has been under "a lot of stress" from the downturn in the residential and commercial real estate industries, Phelan said. Manufacturing has also been hit hard.

(Reporting by Ros Krasny)