TORONTO - Canada's commercial lending industry is healthier than its U.S. counterpart, with fewer borrowers behind on payments and other signs an economic recovery is under way, according to a survey by PayNet Inc.

PayNet, a provider of risk management tools to the commercial lending industry, said loan information it collected showed the two markets had similar delinquency rates until the first quarter of 2008. At that point, the number of U.S. borrowers behind on their payments rose while Canada's delinquency rate fell.

The Canadian market clearly got less risky and some of the things that are occurring to help bring that along are that Canadians have a much more conservative credit culture than the U.S., Bill Phelan, president of PayNet, told Reuters.

Underwriting standards in Canada have always been a little bit tighter and a little bit more reliant upon manual processes to verify from the public records system.

The more conservative lending culture has been credited with helping Canadian banks avoid the billions in losses suffered by their U.S. and European counterparts in the global financial crisis. Canada's banking system has been ranked as the world's soundest by the World Economic Forum.

The commercial finance sector includes non-bank players such as machinery makers, whose loans and leases to customers are secured against the equipment sold.

Skokie, Illinois-based PayNet, which is launching operations in Canada, said Canadian accounts in moderate delinquency, which it defines as being behind 30 days, have fallen to less than 3 percent during the past 12 months. This compares with a U.S. rate of about 4.5 percent.

Phelan said easier access to capital for small and mid-sized businesses, compared with the tight conditions in early 2008, should help to reignite growth in an economy that many feel will return to growth later this year.

If you look at delinquencies as an indicator of what's going on you would say that things are starting to look better rather than worse, said Phelan.

So it's good news that you have a vibrant and strong commercial finance market here in Canada that's a key source of capital for all these small and mid-sized businesses. (Editing by Jeffrey Hodgson)