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

Satisfaction with CSBF Program Parameters

This section reports on executives' perceptions of various features of the Canada Small Business Financing Program.

Mixed Views of CSBFP Features

After being provided with a brief description of the CSBFP, surveyed executives were asked to indicate whether they consider the following features of the program to be too high, about right, or too low:

The maximum loan size is $250 000.
There is a registration fee of 2 percent of the total amount of the loan.
The maximum amount of financing available is 90 percent of the eligible cost of the project or equipment.
The interest rate is capped at prime plus 3 percent.

The results tended to be similar among both sample populations. Majorities in both populations agreed with two features of the CSBFP. There was widespread agreement among borrowers and representatives of SMEs (79-83 percent) that the maximum amount of financing of 90 percent is about right. That said, among those who did not agree with this, borrowers were more likely to think it was too low (11 percent), while representatives of SMEs were more likely to think it was too high (11 percent). Two-thirds in each population (66-68 percent) also agreed that the maximum loan size of $250 000 is about right. Moreover, in both populations, most of those who did not agree with this felt that the amount is too low.

Majorities disagreed with the two other features of the program. Well over half of the borrowers and SME representatives (59-62 percent) felt that the cap on the interest rate at prime plus 3 percent is too high, with nearly all the rest (34-39 percent) thinking it is about right. As well, over half the borrowers and SME representatives (52-56 percent) felt that the 2 percent registration fee is too high; virtually all the rest (42 percent in each group) said it is about right.

Figure 61: Perceptions of CSBFP Features: CSBFP Borrowers

[Description of Figure 61]

Phoenix SPI; Industry Canada - June 2007

Figure 62: Perceptions of CSBFP Features: SMEs

[Description of Figure 62]

Phoenix SPI; Industry Canada - June 2007

Most Regard Other Program Features as Reasonable

All respondents were then asked to comment on the 'reasonableness' of some additional features of the CSBFP. Thinking as both business representatives and taxpayers, they were asked whether they would describe each of the following features as very, somewhat, not very, or not at all reasonable:

Only term loans are available under the program.
CSBF loans are restricted to financing for equipment, real property or immovables, leasehold improvements, and program registration fees.
If a borrower defaults on a loan, the federal government is responsible for 85 percent of eligible losses under the program, and the lender is responsible for 15 percent of the loss.

At least two-thirds of borrowers and representatives of SMEs regarded each of these features as at least somewhat reasonable. Moreover, with one exception, perceptions tended to be very similar both in number and intensity.

Strong and nearly identical majorities in both populations (80-83 percent) regarded the restriction to term loans and the financing restrictions as at least somewhat reasonable. By contrast, borrowers were much more likely to regard the loss sharing arrangements as at least somewhat reasonable (82 percent vs. 66 percent of representatives of SMEs). However, representatives of SMEs were almost twice as likely to regard this feature as not reasonable (32 percent vs. 17 percent of borrowers).

Figure 63: Perceptions of CSBFP Other Features: CSBFP Borrowers

[Description of Figure 63]

Phoenix SPI; Industry Canada - June 2007

Figure 64: Perceptions of CSBFP Other Features: SMEs

[Description of Figure 64]

Phoenix SPI; Industry Canada - June 2007

Most Who Acknowledge Receipt of CSBFP Express Satisfaction With Program Rules

Borrowers^{Footnote 5} who acknowledged receiving a CSBFP loan in the previous 12 months (n = 177) were asked how satisfied they were with the program's rules and procedures in terms of providing financing for small businesses. Using a 5-point scale (1 = very dissatisfied; 5 = very satisfied), 67 percent of borrowers indicated that they were satisfied with the program's rules and procedures. More specifically, one-quarter said they were very satisfied (score of 5), and 42 percent were moderately satisfied (score of 4). The remaining borrowers were much more likely to hold a neutral view, as opposed to a negative one (25 percent vs. 6 percent)

Figure 65: Overall Satisfaction with CSBFP Rules/Procedures: CSBFP Borrowers

[Description of Figure 65]

Phoenix SPI; Industry Canada - June 2007

Borrowers More Likely to View CSBFP as Useful Than Representatives of SMEs

While majorities of both borrowers and representatives of SMEs regard the CSBFP as useful to themselves if they were having difficulty obtaining financing, borrowers were much more likely to think this. Using a 5-point scale (1 = not useful at all; 5 = very useful), 80 percent of borrowers rated the program as useful, with over half (57 percent) describing it as very useful. By comparison, 62 percent of SME representatives rated the program as useful.

Figure 66: Perceived Usefulness of CSBFP to Business