After a lull in July and August, demand for small business lending regained strength in September, according to the monthly Small Business Lending Index released by Direct Capital.

Direct Capital’s Index showed a 12% increase in lending demand in September versus August. In addition, lending demand was up nearly 25% over September 2012 and, overall, is up 26% this year compared to last year, according to the Index.

“We were viewing September as a bellwether month and the numbers are very strong,” said Stephen Lankler, senior vice president at Direct Capital. “This is a great sign for the small business economy. Historically, when lending demand grows in September, the fourth quarter is very solid.”

Lankler said he expects October’s Index numbers to be meaningful. “October is a unique month because it’s long in terms of business days and it’s a big set-up month for the close of the year,” said Lankler. “From a capital planning standpoint, small businesses – especially retailers – need to prepare for the holiday season when inventory and staffing needs increase. So, we expect to see heightened demand for loan and working capital products this month.”

Direct Capital’s Monthly Small Business Lending Index is based on an algorithm that collects data from more than 200 sources.