Lending to small businesses in the United States sagged in March, supporting the view that economic growth is headed for a further slowdown in coming months.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, sank to 98.5 in March from 101.8 a month earlier, PayNet said on Tuesday.

Borrowing rose 10 percent from a year earlier, the lowest 12-month growth rate since January 2011. The lending index is correlated with changes in overall economic growth several months in advance.

"Every indicator on the risk dashboard is positive, and yet smaller business owners are holding back," PayNet founder Bill Phelan said in an interview, noting that interest rates and inflation are low. "They are seeing something in their businesses that is not inspiring confidence and their best instincts are telling them that now is not the time to invest."

The Fed last week said it would likely need to keep interest rates near zero through late 2014 to support an economy that is still trying to pull free of the after-effects of the Great Recession, including 8.2 percent unemployment and continued sluggish growth.

The U.S. economy, which slowed to 2.2 percent in the first quarter from 3 percent in the final quarter of last year, appeared to downshift further as entered the second quarter.

Consumers increased their spending only modestly in March and a gauge of business activity in the Midwest United States fell sharply in April, separate reports on Monday showed.

PayNet tracks borrowing by millions of small U.S. businesses.

Debts Paid

Separate PayNet data suggested small businesses are paying back their debts with relative ease.

Accounts in moderate delinquency, or those behind by 30 days or more, fell to 1.39 percent in March from 1.47 percent in February. That's far below the high of 4.42 percent reached in May 2009.

Accounts 90 days or more behind in payments, or in severe delinquency, fell to 0.34 percent in March, a record low, from 0.36 percent in February.

Accounts behind 180 days or more, or in default and unlikely ever to be paid, fell to 0.48 percent in March from 0.50 percent in January.

PayNet collects real-time loan information, such as originations and delinquencies, from more than 250 leading U.S. capital equipment lenders