Small businesses increased borrowing in March, according to the Thomson Reuters/PayNet Small Business Lending Index. The indicator gained 12% compared with March 2010. In February, it rose 17% compared with the same month last year. Data show loan defaults for small businesses are at a record low. PayNet founder and President William Phelan called small-business balance sheets "pristine." "There's a lot of potential out there [for growth], but we need to see the demand come back to ignite it," he said.