According to a study released Wednesday by PayNet, a Skokie, Ill.-based research firm that tracks loans to small business, lending to small businesses fell 5% in June from May's levels. Loan activity had increased in May after falling the four previous months.

The Thomson Reuters/PayNet Small Business Lending Index fell to 98.5 in June from a revised 103.8 in May.

The drop in lending suggests that small companies are unwilling to invest or expand while the economy looks so uncertain, PayNet said. PayNet bases its index on new commercial loans and leases granted to small businesses by U.S. lenders.

According to a June National Federation of Independent Business survey, 29% of business owners reported that all their credit needs were met, and 51% said they did not want to borrow.

Seven percent reported that not all of their credit needs were satisfied, and a net 7% reported that loans were “harder to get” compared to their last attempt.

The average rate paid on short maturity loans was 6.3% according to the survey, where the rate has been “stuck at much the same level for years,” the small business trade association reported.

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PayNet: Small Business Lending Down Due to Lower Demand

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