NEW YORK (AP) — Small businesses further cut their borrowing in March as they waited to see what the impact of federal budget cuts would be, according to an index released Wednesday.
The Thomson Reuters/PayNet Small Business Lending Index fell to 98.5 in March from a revised 105.4 in February. The index has fallen steadily since December as owners held back on expansion and spending on machinery and other capital investments.
The index is compiled from data on commercial loans and leases in PayNet's database. The company provides credit ratings on small businesses.
Other surveys have shown that small business owners were holding back from borrowing for big purchases and for hiring as they waited to see the effects of budget cuts that went into effect March 1. The full effect of the cuts isn't known yet. Among the small businesses most likely to be affected are those who are federal contractors or subcontractors.
But borrowing has also been curtailed by ongoing concerns about the economy and companies' own sales. Many businesses have focused on paying down debt and have been reluctant to take out new loans or leases while the business climate remains uncertain.
The Thomson Reuters/Paynet findings were in line with a drop in orders for long-lasting U.S. factory goods during March. Orders fell 1.4 percent when aircraft and transportation equipment, which tends to be volatile, were excluded. That was a second straight monthly drop and another sign of small business caution.