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Statistics Canada, in partnership with Industry Canada and Finance
Canada, recently completed a survey on Financing of Small and
Medium-sized Enterprises. This survey, part of a larger program
of data collection and research on small and medium-sized enterprises
(SMEs), asked 11 000 businesses with fewer than 500 employees
if they sought financing in 2000 and what was the nature and outcome
of their application.
In 2000, 23 percent of SMEs requested debt financing. Of
these, 82 percent were successful in obtaining financing.
Requests by larger firms were more likely to be accepted: for
firms with 1 to 4 employees, 79 percent reported their
requests were approved; for firms with 5 to 19 employees,
85 percent of requests were authorized; for firms with 20
to 99 employees, 87 percent were approved; and for firms
with 100 to 499 employees, the rate was 94 percent.
The most common reason given to businesses whose requests were
not approved was insufficient income, revenue or sales.
 Chart
1 shows the various financing instruments requested by SMEs,
with term loans and lines of credit being the most popular, followed
by demand or short-term loans, mortgages and credit cards. The
most common purpose for the requested debt financing was to obtain
working and operating capital (42 percent), while 23 percent
of applicants used the financing to buy machinery or equipment
and 11 percent used it for building and land acquisition.
The majority of requests for debt financing were made to chartered
banks (66 percent), while credit unions and caisses populaires
received 20 percent of applications, followed by government
or Crown corporations with 8 percent of requests. About 64 percent
of the firms that sought debt financing reported that the primary
reason they chose a particular credit supplier was because it
was their regular financial institution.
Further information on the results of the survey may be found
at http://strategis.ic.gc.ca/fdi
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Small Business Research and Policy
