The Reuters/PayNet small business lending index for the US dropped in June to 120.6 from a revised 125.4 in May. It’s the second straight month the index has fallen but the fourth consecutive month that year on year gains have held double digits as it posted a 15% gain from a year ago.

The index has been used as a correlation to GDP growth 2-5 months in the future and PayNet’s founder Bill Phelan says the outlook is still good despite the monthly drop in borrowing.

“We still think it’s a pretty strong report. I’d expect GDP to be fairly robust and positive over the next quarter.”

What is definitely not good news is that another PayNet report showed that SME loan delinquencies were at their highest in over a year. Delinquencies of 31-180 days rose to 1.51% in June from 1.48% in May. It shows signs that there’s still a squeeze on small businesses paying back loans. The index is still well below levels seen directly after the crisis when they peaked at 4.73% in August 2009.

SME activity is often a better gauge for economic growth as it is at the bottom of the economic chain and closer to the feelings and sentiment of Main Street.