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

Subgroup Variations

This section presents subgroup differences for key issues explored in this survey, including variations based on region, language, age of firm, location (i.e. urban-rural), and revenue size. Results are presented first for the CSBFP borrowers, and then for the SMEs. The findings are presented in two ways. First, we provide summary descriptions of the main differences or patterns in each area. These summaries are primarily textual in nature for ease of access to the information. Second, we provide a detailed table that presents a breakdown of the findings for the various subgroups. The tables are also organized by theme.

For this analysis, the different characteristics have been grouped as follows:

Region:

• West
• Ontario
• Quebec
• Atlantic

Language:

• English
• French

Age of firm:

• 3 years and less ('start-up firms')
• 4 years and older ('older firms')

Location:

• Urban
• Rural

Revenue:

• Less than $100 000
• $100 000-$299 000
• $300 000-$999 000
• $1 million or more

To provide further insight on specific issues of interest, additional analysis was performed on selected variables using the following sub-groups:

Perceived Usefulness of CSBFP to Firm:

• Not useful
• Somewhat useful
• Very useful

Overall Satisfaction with CSBFP Rules and Procedures

• Dissatisfied
• Neither satisfied nor dissatisfied
• Satisfied

Overall Awareness of CSBFP

• Aware
• Not aware

Overall Satisfaction with Financing Options Available

• Dissatisfied
• Neither satisfied nor dissatisfied
• Satisfied

Caution should be used when interpreting these results, as in some cases the sample sizes are relatively small.

CSBFP Borrowers

Overview

While a number of experiential, behavioural, and attitudinal differences were evident among respondents across the various subgroups, there were no strong or consistent patterns. To the extent that any patterns were evident, they tended to be based on firm age, location, language, and, to a lesser extent, revenue.

Differences by age of firm and location were most evident regarding loan-related activity and experience. Older firms and rural firms were more likely to have applied for a term loan during the previous 12 months, more likely to have received a loan for the full amount requested, and more likely to have received funding that met all their needs.

Differences in awareness, to the extent that they existed, were most evident regionally and by language. Executives in Ontario and the West and English-speaking executives were more likely to be aware of federal government loan programs in general and the CSBFP in particular.

Differences in satisfaction were most evident by language and location. Executives of rural firms and French-speaking executives were more likely than urban or English-speaking ones to express satisfaction with various factors related to financing. They were also more likely to express satisfaction with the financing options available to them. Finally, they were more likely to describe the program characteristics of the CSBFP as about right.

Differences by revenue, where they existed, either distinguished the smallest firms from the others or the largest ones from the others. For example, firms with revenues in excess of $100 000 were most likely to have received the full amount of requested financing, most likely to have heard about the CSBFP through a bank officer, and most likely to view the maximum financing of 90 percent for CSBFP as about right. Executives of firms with revenues of $1 million or more were most likely to express satisfaction with the financing options available to them, to view the CSBFP registration fee as too high, and to view the maximum loan amount as too low.

These and other subgroup differences are discussed in greater detail below.

Financing Options Used

In terms of the financing options being used or that have been used, the following subgroup differences presented themselves:

• Atlantic firms were noticeably more likely to use lines of credit and credit from suppliers than those in other regions, while those in Quebec were much less likely to make use of credit cards.
  
  
• Older firms were more likely to make use of lines of credit than their younger counterparts.
  
  
• Firms with revenues of $1 million or more were much more likely to use lines of credit, while use of credit cards increased with revenue.
  
  
• Rural firms were more likely than urban ones to use term loans, lines of credit, and credit from suppliers.
  
  
• English executives were more than twice as likely as French executives to report use of credit cards and credit from suppliers.

Applications for Term Loans in Past 12 Months

Executives in the West, in older firms, and in rural firms were most likely to report that their firm applied for a term loan during the previous 12 months. Awareness of the CSBFP was not a factor in making these applications (i.e. those aware and those not aware of the CSBFP were just as likely to have applied for a term loan)².

Success Obtaining Loans

In terms of success obtaining loans, the following sub-group differences were evident:

• Older firms were somewhat more likely to have received the full amount requested.
  
  
• Firms with revenues of less than $100 000 were least likely to have received the full amount of requested financing, while those with revenues of $1 million or more were the most likely to have received it.
  
  
• Rural businesses were more likely than urban ones to have received the full amount of financing.

Extent to Which Loans Met Needs

Regarding the extent to which the loans received met their financing needs, the following variations were evident:

• Regionally, only in Quebec did a majority of respondents report that all of their financing needs were met.
  
  
• Older firms were more likely to have received financing that met all of their needs.
  
  
• Rural firms were much more likely to receive financing that met all of their needs.
  
  
• French-speaking executives were most likely to report that their firm received financing that met 100 percent of their needs.

Overall Awareness of CSBFP and Federal Government Loans Programs

Overall awareness of the CSBFP program (i.e. unaided and aided) was highest among English-speaking executives, executives in Ontario and the West, and executives in younger or start-up firms.

Similarly, awareness of federal government loan programs in general was highest among English-speaking executives, executives in Ontario and the West, and those in urban locations.

Source of Information about CSBFP

The following were most likely to have first learned of the CSBFP through a bank officer:

• Executives in the West and the Atlantic region
• Executives in older firms
• Executives in firms with revenues in excess of $100K
• Rural executives
• English-speaking executives.

Executives in firms with revenues of $100 000 or less and rural executives were more likely to have heard about the CSBFP through a friend or colleague.

Importance of Financing Factors

While there were sub-group differences regarding the importance attributed to various factors regarding financing, there was no consistent pattern, nor were differences that large in general. The following differences are worth noting:

• Regionally, executives in the Atlantic region were most likely to attribute importance to all factors, except service quality and application process time.
  
  
• Executives in start-up firms were more likely to attribute importance to the securities/guarantees needed.
  
  
• The importance the application process time increased with firm revenue.
  
  
• Executives in rural firms were more likely to assign importance to the financing granted vs. the amount requested, while executives in urban firms were more likely to assign importance to application processing time.
  
  
• Borrowers dissatisfied with CSBFP rules and procedures overall were much less likely than others to attribute importance to lender service quality, negotiating terms of financing, the securities and guarantees needed, and service fees. This gap was most pronounced regarding the latter. Those satisfied with the rules were considerably more apt to attribute importance to lender service quality.

Satisfaction with Various Factors of Financing Options

As was the case regarding the importance of these factors, differences in satisfaction with them were evident, but followed no noticeable pattern. Differences included:

• Executives in older firms were more likely to be satisfied with the quality of service, the amount of financing granted, the application processing time, the possibility of negotiating terms, and the variety of financing options available. Executives in start-up firms were more likely to be satisfied with the securities and guarantees required from them.
  
  
• Executives in firms with revenues of $300 000 or more were most likely to be satisfied with the application processing time, and the variety of options available. Satisfaction with the securities and guarantees required decreased as firms' revenues increased in size.
  
  
• Executives of rural firms were more likely to express satisfaction regarding all factors, except service fees. Moreover, they were much more likely than urban executives to express satisfaction regarding most of these factors.
  
  
• French-speaking executives were more likely to express satisfaction regarding most factors. Moreover, they were much more likely than English-speaking executives to express satisfaction regarding the amount of financing granted, the variety of options, and negotiating terms.

Satisfaction with Availability of Financing Options

A majority of executives in all regions except Atlantic Canada expressed satisfaction with the financing options available. The following were also more likely to express satisfaction: executives in older firms, executives in firms with the largest revenues (i.e. $1 million or more), executives in rural areas, and French-speaking executives.

Perceptions of CSBFP Features

While there were differences regarding the various features of the CSBFP, there was no evident or consistent pattern to them:

• The registration fee of 2 percent was regarded as too high by a majority of executives in Ontario and the West, while bare majorities in Quebec and the Atlantic region regarded it as about right. Executives in firms with revenues over $1 million and English-speaking executives were also more likely to view the registration fee as too high. Those who thought that the CSBFP was very useful were also the least apt to see this fee as too high, and the most to see it as just right.
  
  
• The maximum loan size of $250 000 was most likely to be viewed as about right in Quebec and the Atlantic region, among rural executives, and among Frenchspeaking executives. Executives in firms with revenues over $1 million, executives in urban firms, English-speaking executives, and those who felt the program was at least somewhat useful to them were more likely to view this as too low.
  
  
• The maximum financing amount of 90 percent was most likely to be viewed as about right by executives in firms with revenues over $100 000. By contrast, those in Ontario and English speakers were much more likely than others to see it as too high. Executives for whom the program was not useful were more apt to agree this maximum was about right. Those who thought the program was somewhat useful were considerably more likely than others to view this maximum as too low.
  
  
• The interest rate was viewed as too high by a majority of executives in all regions, except Quebec. Mirroring this, English-speaking executives were much more likely to feel this way than French-speaking executives. The more useful executives viewed the program to be, the more apt they were to feel that this is about right, and the less likely they were to see it as too high.

Regardless of region, firm age, revenue, location, language, or perceived usefulness of the program, the large majority of executives (at least seven in ten) regarded the following features of the CSBFP as at least moderately reasonable:

• The government shares losses with the lender.
• Only term loans are available.
• CSBFP loans have restricted financing uses.

Satisfaction with Aspects of CSBFP Financing

A number of differences were also apparent in terms of satisfaction with various aspects of their CSBFP loans. These included:

• Executives in Ontario were much less likely than others to express satisfaction with the financing granted, the annual administration fee, and along with those in Atlantic Canada, the securities and guarantees required. Those in Atlantic Canada were more apt than others to be satisfied with the financing granted, availability of program information, the administrative reporting requirements, registration fees, and annual administration fees. The latter four increased as executives were located further east (i.e. increased from west to east).
  
  
• Executives of firms four years of age or older were much more likely than others to be satisfied with the approval time, and other aspects of the application process.
  
  
• Firms with the highest revenues (i.e. $1 million or more) were the most likely to be satisfied with the registration fees and the approval time (the latter increased with revenue size). Meanwhile, satisfaction with the securities and guarantees needed increased the smaller the firm's revenues. Smaller firms were also much more satisfied with the availability of program information.
  
  
• Executives in rural firms were more likely than their urban counterparts to express satisfaction with all aspects of their CSBFP financing.
  
  
• Similarly, French-speaking executives were noticeably more apt to express satisfaction with each aspect of CSBFP financing compared to English speakers.
  
  
• As one might expect, executives that were satisfied with the CSBFP rules and procedures overall were considerably more likely than others to be satisfied with each individual aspect of their CSBFP loan. With the exception of approval times and the annual administration fee, the greater their overall satisfaction, the more likely executives were to be satisfied with each aspect (i.e. those dissatisfied overall were less likely than those neither dissatisfied nor satisfied to express satisfaction with specific aspects).

Overall Satisfaction with CSBFP Rules and Procedures:

Executives who were satisfied overall with the financing options available to them were also much more likely than those not satisfied to express satisfaction with CSBFP rules and procedures.

Perceived Usefulness of CSBFP

Perceptions of the usefulness of the CSBFP tended to vary little across all subgroups. The only differences worth noting were as follows. In terms of regional differences, stronger majorities of executives in the West and in Ontario perceived the CSBF program as useful should they encounter difficulties obtaining financing in the future. Borrowers that were satisfied with the CSBFP rules overall were also more likely to perceive the program to be useful. This was also the case with those satisfied overall with the financing options available to them.

Table 1: CSBFP Borrowers Subgroup Variations (Main)

Table 2: CSBFP Borrowers Subgroup Variations (Program Characteristics)

SME Representatives

Overview

Among the experiential, behavioural, and attitudinal differences evident across the various subgroups, attitudinal differences were the only ones subject to any pattern. Specifically, differences in satisfaction were evident by region, language, location, age of firm, and revenue. Satisfaction with most or all factors related to financing was most likely to be expressed by executives in Quebec, French-speaking executives, executives in rural firms, executives in older firms, and executives in firms with revenues over $1 million. Executives in Quebec, executives in older firms, and French-speaking executives were also much more likely to express satisfaction with the financing options available to them. As well, satisfaction with available financing options increased noticeably with revenue.

Differences in awareness were evident by age of firm, location, language, and, to a lesser extent, revenue. Executives in 'start-up' firms, urban firms, and English-speaking executives were more likely to be aware of federal government loan programs in general and the CSBFP in particular. Awareness of the CSBFP was also somewhat higher among executives in firms with revenues over $1 million, while awareness of government programs in general increased with firm size.

Financing Options Used

In terms of the financing options being used or that have been used, the following sub-group differences were evident:

• Quebec firms were noticeably less likely to use lines of credit, term loans, and credit from suppliers than those in other regions.
• Older firms were more likely to make use of lines of credit, while start-up firms were more likely to use credit cards and term loans.
• The likelihood of using lines of credit increased with revenue.
• Rural firms were more likely than urban ones to use term loans, while urban ones were more likely to use credit cards.
• English executives were more than twice as likely as French executives to report use of lines of credit, credit cards and credit from suppliers.

Applications for Term Loans in Past 12 Months

Executives in the Atlantic region, firms with revenues of $300 000 or more, and executives in rural firms were more likely to report that their firm applied for a term loan during the previous 12 months. Awareness of the CSBFP was not a factor in making these applications³.

Success Obtaining Loan(s)

In terms of success obtaining loan(s), executives from firms in Quebec and the West, from start-up firms, and French-speaking executives were much likely to indicate that their firm received the full amount requested. Executives in firms with revenues of less than $100 000 or $1 million or more were also more likely to indicate this.

Extent to Which Loans Met Needs

The following were much more likely to indicate that the financing received met all of their needs:

• Executives in Quebec and the West
• Executives in older firms
• Executives in firms with revenues of $300 000 or more
• Executives in rural firms
• French-speaking executives.

Overall Awareness of CSBFP and Federal Government Loans Programs

Overall awareness of the CSBFP program (i.e. unaided and aided) was similar in all regions, except Quebec, where it was noticeably lower. Awareness of the program was also higher among executives in start-up firms, and somewhat higher among executives in firms with revenues of $1 million or more, executives in urban firms, and English-speaking executives.

Overall awareness of federal government loan programs in general was highest in the Atlantic region and among executives in start-up firms, urban locations, and among English-speaking executives. Awareness also increased with revenue size.

Source of Information about CSBFP

The following were most likely to have first learned of the CSBFP through a brochure or pamphlet:

• Executives in Quebec
• Executives in older firms
• Executives in rural firms
• French-speaking executives.

The following were most likely to have first learned of the CSBFP through a friend or colleague:

• Executives in start-up firms
• Executives in firms with revenues of $100 000 or less
• Executives in urban firms
• English-speaking executives.

Importance of Financing Factors

While there were sub-group differences regarding the importance attributed to various factors regarding financing, there was no consistent pattern, nor were differences that wide in general. The following differences were evident:

• Executives in start-up firms were more likely to attribute importance to the possibility of negotiating terms and the amount of financing received vs. the amount requested.
  
  
• Executives in firms with revenues of $100 000 or less were least likely to attribute importance to all factors, except the interest rate and the securities/ guarantees needed.
  
  
• Executives in rural firms were somewhat more likely to assign importance to the financing granted vs. the amount requested, the application processing time, and the variety of options available.
  
  
• French-speaking executives were somewhat more likely to assign importance to the application processing time.

Satisfaction with Various Factors of Financing Options

Differences in satisfaction with these same factors did, however, reveal certain patterns. Difference included:

• French-speaking executives were most likely to express satisfaction with all these factors. Those in Quebec were the most apt to be satisfied with the application process time, interest rate, ability to negotiate, the variety of options, the securities/guarantees needed, the service fees, and along with those in Atlantic Canada, the quality of service from their lenders.
  
  
• Executives in older firms were more likely to be satisfied with the application process time, quality of service, and variety of options. Conversely, those with younger firms were more apt to be satisfied with the interest rate, securities required, and the service fees.
  
  
• Executives in firms with revenues of $1 million or more were most likely to be satisfied with the quality of lender service, the interest rate, the ability to negotiate, and the service fees. Moreover, satisfaction with the latter two increased with size of revenue. Those with revenues of less than $100 000 were much less likely than others to be satisfied with the financing granted to them and the processing time.
  
  
• Executives from rural firms were more likely to express satisfaction regarding all factors, except the interest rate. Executives in urban firms were more likely to express satisfaction with the latter.

Satisfaction with Availability of Financing Options

The following were much more likely to express satisfaction with the financing options available to them: executives in Quebec, executives in older firms, executives in rural areas, and French-speaking executives. As well, satisfaction with financing options available increased noticeably with revenue.

Perceptions of CSBFP Features

While there were differences regarding the various features of the CSBFP, there were no consistent patterns:

• The registration fee of 2 percent was regarded as too high by a majority of executives in Ontario and the West, while those in Quebec and the Atlantic region were most likely to regard it as about right. Executives in rural firms and English-speaking executives were also more likely to view the registration fee as too high, while those in urban firms and French-speaking executives were more likely to view it as about right. Finally, executives in firms with revenues over $1 million were most likely to view the registration fee as too high. Those who felt that the CSBFP would be useful were the most likely to see this as about right, while majorities of others felt it was too high.
  
  
• The maximum loan size of $250 000 was most likely to be viewed as about right among French-speaking executives, and least likely among those who did not expect the CSBFP to be useful to them. Executives in firms with revenues over $1 million were most likely to view this as too low.
  
  
• The maximum financing amount of 90 percent was most likely to be viewed as about right by French-speaking executives, and those who thought the program could be useful to their company.
  
  
• The interest rate was most likely to be viewed as too high by executives in Ontario and the West, executives in rural firms, and English-speaking executives. The perception that the interest rate is too high also increased with revenue size.

Regardless of region, firm age, revenue, location, language, or perceived usefulness of the program, the large majority of executives regarded the following features of the CSBFP as at least moderately reasonable: only term loans are available and CSBFP loans have restricted financing uses. The provision according to which the government shares losses with the lender was somewhat more likely to be viewed as at least moderately reasonable by executives in start-up firms. This was also much more likely among those who felt that the program would be useful. Moreover, while majorities in each region considered this to be at least moderately reasonable, a smaller majority in the Atlantic region felt this way.

Perceived Usefulness of CSBFP

The following were most likely to perceive the CSBFP as useful should they encounter difficulties obtaining financing in the future:

• Executives in Ontario
• Executives in firms with revenues over $100 000
• Executives in urban firms
• English-speaking executives.

In addition, the more satisfied executives were with the overall availability of financing options, the more apt they were to perceive the CSBFP to be useful should they need it.

Table 3: SME Subgroup Variations (Main)

Table 4: SME Subgroup Variations (Program Characteristics)

Table 5: CSBFP Borrowers and SME Subgroup Variations (Additional Perceptions of CSBFP)

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² Not included in tables: 66 percent of those aware and 66 percent of those not aware of CSBFP applied for term loan.

³ Not included in tables: 15 percent of those aware and 16 percent of those not aware of CSBFP applied for term loan.