Canada Small Business Financing Program (CSBFP) Awareness and Satisfaction Study

Awareness and Use of CSBFP

This section reports on awareness of a federal government program that guarantees the loans of small businesses, including awareness of the CSBFP specifically, and explores related issues.

Nearly One-Quarter of CSBFP Borrowers Think Loan Not Covered by Federal Program

CSBFP borrowers and SME representatives who said that their business had received one or more loans during the previous 12 months were asked whether the loan(s) was/were covered by a program offered by the federal government that provides a guarantee on loans to small business.

Among CSBFP borrowers, nearly one-quarter (23 percent) said that the loan was not covered by a program offered by the federal government that provides a guarantee on loans to small business, while an additional 1 percent was unsure. This despite the fact that all of these businesses received loans under the CSBFP. This suggests that financial institutions are not consistently identifying the CSBFP to businesses that receive it.

Among representatives of SMEs, the vast majority (87 percent) said that the loan was not covered by a program offered by the federal government that provides a guarantee on loans to small business. However, 9 percent thought that their loan was covered by such a program. That said, this equates to only five SME respondents (9 percent of 54 respondents).

Awareness among CSBFP borrowers that their loan is covered by a program offered by the federal government that provides a guarantee on loans to small business is virtually identical to what it was six years ago. On the other hand, SME representatives are much less likely to say that their loan is covered by such a program (9 percent vs. 24 percent in 2001).

Most Borrowers Who Acknowledge Federal Loan Cannot Remember Program Name

Most borrowers who indicated that their firm received a loan covered by a federal program could not recall the name of the program. In total, 58 percent could not recall any name, while a further 28 percent identified the program as a 'small business loans' program in a generic manner, although a few of these may have specifically identified the Small Business Loans Act. As well, another 3 percent identified the program as a "guaranteed loan for small business".

In total, 7 percent identified the program correctly by name as the Canada Small Business Financing Program. Two percent identified the program as a Business Improvement Loan. Included in the 'other' category are a business development loan.

Compared to six years ago, the ability of CSBFP borrowers to identify the program by its correct name (i.e. CSBFP) has increased to 7 percent, compared to one respondent in 2001.

Of the five representatives of SMEs who thought their firm had received a loan covered by a federal program, they all identified variations of a small business loan generically or a guaranteed loan for small business.

Most Businesses Denied Loans Were Not Informed of Federal Loan Program

Managers of businesses whose loan applications were turned down were asked whether the financial institution brought to their attention any programs offered by the federal government that provide a guarantee on loans to small business.

Among CSBFP borrowers (n = 21), three-quarters (76 percent) said that such a program was not brought to their attention. As well, 14 percent were unsure or could not recall, while 10 percent (two participants) said it was brought to their attention.

Among representatives of SMEs (n = 25), all but one (96 percent) said that they were not informed about the federal government program.

Of the three respondents whose businesses were refused a loan and who said that the financial institution did identify a loan program offered by the federal government, none could recall the name of the program.

Most CSBFP Borrowers Aware of Federal Government Guaranteed Loan Programs

All respondents (i.e. CSBFP borrowers and SME representatives) who did not indicate awareness of a federal government loan program by name were asked the following question:

Are you aware of any programs of the federal government that guarantee the loans of small businesses and share the risk with the financial institution?

In response, just over half the CSBFP borrowers (53 percent) said they were aware of such programs, while 46 percent said they were not. Awareness was much lower among representatives of SMEs. Just over one-quarter of SMEs (28 percent) claimed to be aware of a federal government program that guarantees the loans of small businesses.

In total, therefore, 71 percent of all CSBFP borrowers claimed to be aware of a federal government program that guarantees the loans of small businesses. This includes borrowers who acknowledge receiving a loan covered by a federal program, those whose firm was turned down for a loan, and those who indicated awareness of federal government programs when asked explicitly.

This constitutes 'unaided awareness' of federal loan programs in general (i.e. not by name).

Awareness was much lower among SME representatives. In total, just over one-quarter of all SMEs representatives (28 percent) claimed to be aware of a federal government program that guarantees the loans of small businesses.

Awareness of federal government programs that guarantee the loans of small businesses is lower than it was six years ago, both among CSBFP borrowers (72 percent vs. 81 percent in 2001) and among representatives of SMEs (28 percent vs. 41 percent in 2001).

Majority of Those Aware of Federal Program Cannot Remember Name

These respondents that were aware of federal programs that guarantee loans of small businesses when asked explicitly were asked if they could recall the names of any such programs. Small numbers (3 percent CSBFP borrowers, 1 percent SME representatives) identified the CSBFP by name.

Most Unaware of CSBFP Program by Name on Aided Basis

As a final measure of awareness of the CSBFP, all participants who had not identified the program by name were asked directly if they had ever heard of the program (with its name provided to them). Even on this aided basis, only about one in five (19-22 percent) claimed to have heard of the program. Nearly three-quarters (72-74 percent) of the CSBFP borrowers and representatives of SMEs who were asked this question said that they had not heard of the program.

One-Quarter of CSBFP Borrowers Aware of Program by Name

Total awareness of the CSBFP among borrowers is 25 percent. In other words, one-quarter of executives of businesses that received a loan under this program acknowledge awareness of the program by name. Moreover, awareness is much more likely to be aided than unaided. In all, only 4 percent of borrowers identified the CSBFP by name in an unprompted manner. This includes borrowers who acknowledged receiving a loan covered by a federal program, those whose firm was turned down for a loan, and others who indicated awareness of this program when asked explicitly about federal programs that guarantee the loans of small businesses.

In addition, 51 percent claimed to be aware of federal government loans programs in general. That is, they said they knew that there was one or more federal programs that share the risk with financial institutions, even if they knew nothing else about such programs.

Finally, 24 percent percent were not even aware that there were any such programs. To be clear, these 24 percent consistently indicated in all related questions that they were not aware of any federal government programs that guarantee the loans of small businesses and share the risk with financial institutions.

Limited Awareness of CSBFP Among SMEs

Awareness of the CSBFP among representatives of SMEs is relatively limited. Only one in five (19 percent) claimed awareness of the program by name, almost all of whom were able to do so on an aided basis only. Only one SME representative identified the CSBFP by name in an unprompted manner.

In addition, 20 percent claimed to be aware of federal government loans programs in general – they knew there was one or more federal programs that share the risk with financial institutions, even if they knew nothing else about such programs.

The clear majority, 61 percent, were not even aware that there were any such programs. Once again, these executives consistently indicated in all related questions that they were not aware of any federal government programs that guarantee the loans of small businesses and share the risk with financial institutions.

Relatively Limited Knowledge of CSBFP

All respondents who claimed to be aware of the CSBFP by name (aided and unaided awareness) were asked what they knew about it.

Among CSBFP borrowers, over one-third (37 percent) said they knew nothing at all about the program, while a further 3 percent did not provide an answer. In total, therefore, 40 percent of respondents claiming to be aware of the program by name were unable to provide any substantive feedback about it. The most frequently identified aspect of the program was that it is a government program designed to help small business get financing. Just over one-quarter (27 percent) identified this. This was followed by the perception that losses are shared by government (17 percent) and the perception that fewer guarantees are required to secure the loan (14 percent).

All other responses lacked salience (6 percent or less). These included the view that there is a maximum financing amount, that the loan is restricted to financing certain kinds of assets, that it is a bank-administered program, that it is too expensive, and that there are program registration fees. Included in the 'other' category are perceptions that the criteria are rigid and that the loan is related to equipment leasing.

The inability of borrowers to identify anything about the program has decreased over time (40 percent vs. 50 percent in 2001). Current borrowers were much more likely to say the program is designed to help small business get financing (27 percent vs. 7 percent in 2001) and that the losses are shared by government (17 percent vs. 5 percent in 2001). However, caution should be exercised when tracking responses that have been coded (more open to coding error/difference in wording).

Knowledge of CSBFP (over time): CSBFP Borrowers

Knowledge of CSBFP	2007  %	2001  %
Phoenix SPI; Industry Canada - June 2007
Govt. program to help small businesses	27	7
Losses shared by Govt.	17	5
Max. financing amount	6	4
Restricted loans	6	2
Nothing/no response	40	50
Other	4	13

Among representatives of SMEs, a majority (57 percent) said they knew nothing about the program, while a further 1 percent did not provide an answer. As was the case among borrowers, the most frequently identified aspect of the program was that it is designed to help small business get financing (22 percent). All other responses were provided by small numbers (6 percent or less). These included the view that fewer guarantees are required to secure the loan, that there are many rigid criteria, that there is a maximum financing amount, that the loan is restricted to financing certain kinds of assets, and that it is too expensive.

Included in the 'other' category are perceptions that there are registration fees and that the loan is related to equipment leasing.

As was the case with borrowers, the inability of SME representatives to identify anything about the program has decreased over time (58 percent vs. 69 percent in 2001). Current respondents were much more likely to say the program is designed to help small business get financing (22 percent vs. 6 percent in 2001).

Knowledge of CSBFP (over time): SMEs

Knowledge of CSBFP	2007  %	2001  %
Phoenix SPI; Industry Canada - June 2007
Govt. program to help small businesses	22	6
Losses shared by Govt.	2	3
Nothing/no response	58	69
Other	6	12

Banks – Borrowers' Main Source of Information About CSBFA

CSBFP borrowers aware of the program were most likely to have learned about it through a bank officer (41 percent), followed at a distance by a friend or colleague (22 percent). The only other source of information identified with any frequency was a business service provider (8 percent).

Small numbers (4 percent or less) identified the following: federal government website, brochure/pamphlet, bank/private sector firm website, CSBFP website, a previous CSBFP loan, involvement in funding programs in general, and media sources.

Some (6 percent) could not recall their source of information, and a further 4 percent did not provide an answer. Included in the 'other' category are business associations and the Internet (unspecified).

The likelihood of having learned about the CSBFP from a bank officer has decreased over time (41 percent vs. 53 percent in 2001), though it remains the main source of information about the program. By contrast, the likelihood of having heard about it from a friend or colleague has increased (22 percent vs. 11 percent in 2001).

Source of Info about CSBFP (over time): CSBFP Borrowers

Source	2007  %	2001  %
Phoenix SPI; Industry Canada - June 2007
Bank officer	41	53
Friend/colleague	22	11
Business service provider	8	6
Brochure/Pamphlet	2	6
Other	4	11

Acquaintances & Publications – SMEs' Main Source of Information About CSBFA

Representatives of SMEs aware of the CSBFP were most likely to have learned about it through a friend or colleague (26 percent) or a brochure/pamphlet (25 percent). In contrast to CSBFP borrowers, relatively few SME representatives (9 percent) learned about the program through a bank officer.

Similar numbers (5-7 percent) learned about the program through a government contact, business association, involvement in funding programs in general, or a service provider. Some (8 percent) could not recall their source of information. Included in the 'other' category are a federal government website (unspecified), the CSBFP website, and a previous CSBFP loan.

The likelihood of having learned about the CSBFP from friends/colleagues and brochures/pamphlets has increased over time. Conversely, the likelihood of learning about it through media sources and business service providers has decreased.

Source of Info about CSBFP (over time): SMEs

Source	2007  %	2001  %
* Newspapers, radio and publications in 2001 (back to footnote reference *) ** Website in 2001 (back to footnote reference **) Phoenix SPI; Industry Canada - June 2007
Friend/colleague	26	14
Brochure/Pamphlet	25	17
Bank officer	9	12
Media sourcesFootnote *	5	12
InternetFootnote **	4	5
Business service provider	2	8
CSBFP website	1	5
Other	1	12

Majority of CSBFP Borrowers Informed About Program by Lender

A majority of borrowers aware of the CSBFP (52 percent) indicated that when seeking financing, the lender identified the program to them for consideration. Just under one quarter (22 percent) said they themselves asked about the CSBFP, while 17 percent said they neither asked about it nor was it brought to their attention. Eight percent indicated that they could not recall, and 1 percent did not provide an answer.

Among representatives of SMEs aware of the program, three-quarters (74 percent) said they neither asked about it nor was it brought to their attention, 15 percent said the lender identified the program to them for consideration, and 4 percent said they themselves asked about it. Five percent indicated that they could not recall, and 2 percent did not provide an answer.

Many Borrowers Unsure Whether Business Obtained Loan Under Federal Program

All respondents except those who indicated that their firm has not obtained external financing were asked if their business has ever obtained a loan covered by a government program, either federal or provincial, that guarantees the loans of small businesses and shares the risk with the financial institution.

Among CSBFP borrowers, 60 percent indicated that their firm has obtained such a loan, either federally (32 percent), provincially (10 percent), or they were unsure from which level of government (18 percent). Conversely, one-third (32 percent) said they had not received such a loan. Despite the fact that all these participants' businesses received a loan under the CSBFP, only one-third were certain that their business has obtained a loan covered by a federal government program.

Eighteen percent were unsure about the level of government, and 7 percent were not sure or could not recall.

Results have changed little compared to 2001. Borrowers are slightly less likely to indicate that they have never obtained such a loan (32 percent vs. 38 percent in 2001) and slightly more likely to indicate that they have received such a loan from the federal government (32 percent vs. 27 percent in 2001).

Among representatives of SMEs, approximately three quarters (74 percent) indicated that their firm has never received such a loan, either federally or provincially. Conversely, 23 percent indicated that their firm has obtained such a loan. Seventeen percent said they obtained a federal loan, 3 percent a provincial loan, and 3 percent were unsure about the sponsor.

Compared to 2001, representatives of SMEs are more likely to indicate that they have received a loan covered under a federal government program (17 percent vs. 9 percent in 2001).

Vast Majority Have Never Refused Government Guaranteed Loan

The vast majority of CSBFP borrowers who have obtained external financing for their business (88 percent) said that they have never refused to accept a government guaranteed loan, either federal or provincial. Nine percent said they have refused such a loan and 3 percent could not recall or did not answer the question.

Of those who indicated that they refused such a loan, 4 percent said they refused a federal loan, 2 percent a provincial loan, and 3 percent were unsure of the sponsor.

These results are virtually identical to results in 2001.

When borrowers whose firms refused such a loan (n = 42) were asked why, the most frequently identified reason was that it was too expensive (31 percent), followed by perceptions that the program was too restrictive and that the loan was not necessary (21 percent each). Some felt that there was too much of an administrative burden (12 percent), while a few said they had other financing options or refused on the advice of the banker/lender.

The situation was similar among representatives of SMEs, with 84 percent indicating that they have never refused to accept a government guaranteed loan, either federal or provincial. Eight percent said they had refused such a loan and 7 percent could not recall or did not answer the question. Of those who indicated that they refused such a loan, 3 percent said they refused a federal loan, 2 percent a provincial loan, 2 percent said they refused both, and 1 percent were unsure of the sponsor.

As was the case among borrowers, these results are virtually identical to results in 2001.

Representatives of SMEs whose firms refused such a loan (n = 43) were most likely to explain their refusal by suggesting that it was too expensive or unnecessary (26 percent each), followed by the perception that the program was too restrictive (21 percent). Some felt that there was too much of an administrative burden (16 percent), while a few said they had other financing options. A few others (5 percent) could not recall why they refused the loan.