Canadian commercial lending edged up for the fifth straight time in the final quarter of last year and reached its highest since 2009, suggesting a pickup in investment that should help keep the economy growing.

PayNet, which tracks commercial financing to hundreds of thousands of small and medium-sized companies, said on Thursday its Canadian Business Lending Index rose 2% from the third quarter and 14% year over year.

The data marked the fifth straight quarter of expansion since bottoming out in 2010, and the second double-digit advance on a year-over-year basis.

"When you look at these numbers, what this means is that Canadian businesses are feeling a lot more confident to expand again," said William Phelan, PayNet's president and founder.

"When you're seeing long-term investments by private companies, you know that there's a lot of underlying strength that's accumulating in the economy."

The commercial finance sector includes non-bank lenders such as machinery makers, whose loans and leases to customers are secured against the equipment sold.

"These are (on average) four-year projects to expand property, plant and equipment. When you have investments in property, plant and equipment, you're usually raising productivity, you're going to ultimately get some new hiring."
Compared with the United States, Canada is still about two years ahead in terms of relative growth in investment, Phelan said, with more underlying strength in the Canadian economy.

Other PayNet data released on Thursday showed moderate and severe loan delinquencies were also stable, mostly outperforming their U.S. counterparts.

Moderate loan delinquencies - defined as those being behind by 30 days or more - were up slightly to 1.22% of total loans in December, from 1.18% in September.

"The risk is as calm as glass," Phelan said. "It's meandering a little bit, but it's not sending signals of a rising risk environment of Canadian businesses. It really is amazing that risk levels are lower than 2005, before the last recession."

Severe loans in arrears - those behind more than 90 days - fell to 0.38% in December, from 0.45% three months earlier.