The PayNet Canadian Small Business Lending Index rose to 118.7 in July from 118.4 the month before. Compared with a year ago, the index was down 11 percent, moderating from an annual decline of 13 percent in June.
Business investment in Canada has been hit by the slump in oil prices that briefly put the country in recession last year.
"It's a good sign because we're hitting a support level for business investment," said PayNet President Bill Phelan. "When they start to hit a base-line bottom, that at least means we've found the depths of the pullback."
By sector, manufacturing was a bright spot, rising to 65.3 from 64.9, while the retail segment pushed higher to 177.5 from 176.9.
Both are sectors that have been looked at to lead the recovery, but their growth has not been enough so far to offset a drag from the commodity sector, said Phelan.
Lending to medium-sized businesses continued to contract, with the index declining to 192.1 from 211.6. But the yearly rate of decline held steady at 18 percent, suggesting the weakness was finding a plateau.
The number of small businesses that were behind on their bills 30 days or more eased to 1.14 percent from 1.17 percent. The amount of firms that were delinquent 90 days or more held steady at 0.35 percent.
(Reporting by Leah Schnurr; Editing by Alan Crosby)
