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March 21 (Reuters) - U.S. business borrowing to spend oncapital goods jumped 31 percent in February from a year earlieras companies prepare to meet a surge in demand following recenttax cuts, the Equipment Leasing and Finance Association (ELFA)said.

Companies signed up for $7.7 billion in new loans, leasesand lines of credit last month, up from $5.9 billion a yearearlier. Borrowing rose 13 percent from January.

"Momentum spurred on by recently enacted tax changestogether with an economy beginning to hit on most, if not all,cylinders, is creating a compelling demand cycle for capitalequipment acquisition by American businesses, large and small,"ELFA Chief Executive Ralph Petta said in a statement.

Washington-based ELFA, a trade association that reportseconomic activity for the $1 trillion equipment finance sector,said credit approvals totaled 74.2 percent in February, downfrom 76.9 percent in January.

ELFA's leasing and finance index measures the volume ofcommercial equipment financed in the United States. It isdesigned to complement the U.S. Commerce Department's durablegoods orders report, which it typically precedes by a few days.

ELFA's index is based on a survey of 25 members that includeBank of America Corp, BB&T Corp, CIT Group Incand the financing affiliates or units of Caterpillar Inc, Deere & Co, Verizon Communications Inc,Siemens AG, Canon Inc and Volvo AB.

The Equipment Leasing & Finance Foundation, ELFA'snon-profit affiliate, said its confidence index fell to 72.2 inMarch from 73.2 in February.

A reading of above 50 indicates a positive outlook.(Reporting by Sanjana Shivdas in Bengaluru; Editing by AnilD'Silva)