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

Regression Analysis

Predicting the Drivers of Satisfaction with Financing Options Available

In order to add texture to the survey results, multivariate analysis was undertaken with selected findings from the survey. The main purpose of the regression analysis is to help determine the drivers of overall satisfaction with the financing options available to SMEs. Consequently, the dependent variable chosen for this analysis was question 42 (Overall, how satisfied were you with the financing options available?). Separate analyses were undertaken for each survey population: CSBFP borrower firms and SME participants.

A set of independent variables was tested for this dependent variable using a stepwise technique that allows statistically significant predictors to enter the model based on their predictive power. Regression models included questions 34 to 41 (satisfaction with the range of financing options available). The questions used in the model are included at the end of this section. The results of regression analysis are described below.

MODEL 1: Results of Regression Analysis for SMEs

The set of independent variables explained 68 percent of the variance observed in the dependant variable. This is a highly acceptable regression “fit”.

The regression analysis suggests that, while controlling for the effect of all independent variables entered into model, the following items are statistically significant predictors of overall satisfaction with financing options available:

• The quality of service received from lender(s).
• The possibility of negotiating the terms of financing, such as service fees and repayment conditions.
• Access to a variety of financing options.
• The amount of financing granted compared to the amount requested.
• The securities and guarantees required by financial institutions, whether personal or corporate.

This regression model suggests that, among five statistically significant predictors, the first two predictors account for 60 percent of the variance in the dependent variable. For SMEs, the quality of service received from the lender(s) is, by far, the strongest driver of overall satisfaction. The possibility of negotiating the terms of financing is the second most powerful predictor of overall satisfaction with the financing options available. Still statistically significant, although to a lesser degree, are the other independent measures.

MODEL 2: Results of Regression Analysis for CSBFP Borrowers

The results of the regression analysis for this audience suggest a smaller, although still acceptable, “fitness” of the model at 60 percent variance in the dependent variable explained by independent variables. While controlling for the effect of all independent variables entered in the model, five measures were found to be significant predictors of overall satisfaction with financing options available. These include:

• Access to a variety of financing options.
• The service fees.
• The quality of service received from lender(s).
• The amount of financing granted compared to the amount requested.
• The possibility of negotiating the terms of financing, such as service fees and repayment conditions.

This regression model suggests that, among the five statistically significant predictors listed, the first three predictors account for 57 percent of the variance in overall satisfaction. For CSBFP borrowers, access to a variety of financing options is, by far, the strongest driver of overall satisfaction. The service fees and the quality of service received from the lender(s) are other two most powerful predictors of overall satisfaction with the financing options available. The other independent measures also predict the satisfaction with financing options available, although to a lesser degree.

Summary

Regression models for both SME and CSBFP borrower firms show that independent measures are reliable and stable predictors of overall satisfaction with the financing options available. The regression model for the SMEs explains over two-thirds of the variance in overall satisfaction, while the model for CSBFP borrowers explains 60 percent of the variance in overall satisfaction with the financing options available. The quality of service received from lenders and access to a variety of financing options were among the three most powerful predictors for both audiences.

Questions Included in Regression Analyses

The following questions were included in the regression analysis of overall satisfaction with financing options available.

Dependent variable:

Q42: Overall, how satisfied were you with the financing options available?

Independent variables:

Q34: The interest rate.

Q35: The service fees.

Q36: The time required to process applications.

Q37: Access to a variety of financing options.

Q38: The possibility of negotiating the terms of financing, such as service fees and repayment conditions.

Q39: The amount of financing granted compared to the amount requested.

Q40: The securities and guarantees required by financial institutions, whether personal or corporate.

Q41: The quality of service you receive from your lender(s).