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ARCHIVED—Canada Small Business Financing Act

Annual Report 2010–2011

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3. Program Performance Analysis

3.1 Program Activity

The Small Business Financing Directorate (the Directorate) administers the CSBF Program. During 2010–11, the Directorate received 3911 inquiries from small businesses and lenders through the CSBF Program's info-line and website. As one of Industry Canada's most visited sites, the program's website received 261 884 visits. The program's pamphlet, Lending a hand to your business, had a distribution of more than 86 000 copies. A variety of outreach activities were conducted throughout Canada in order to increase awareness of the CSBF Program among small businesses, lenders and business support organizations.

3.2 Lending and Claim Volumes

Loans

During 2010–11, the value of loans registered by private sector lenders under the CSBF Program was almost $1.03 billion, an increase of approximately $74 million (7.7 percent) from last year (see Figure 1A). This is the highest value of loans since 2006–07. There was a decrease of 68 (less than 1 percent) in the number of loans to 7 466. However, the average loan size grew by 8.7 percent to $137 521. The increase in the overall loan value and in the average loan amount is due in part to the increase in the maximum loan amount from $250,000 to $500,000, which came into effect on April 1, 2009 (see Section 3.4 "Lending and Claims by Size of Loans"). Since 1999, the CSBF Program has registered 128,800 loans worth over $12.3 billion.

Figure 1A: Number and Value of Canada Small Business Financing Loans, 1999-2011
Figure 1A: Number and Value of Canada Small Business Financing Loans, 1999-2011
Description of Figure

This vertical bar graph compares the total number of loans and the total value in millions of dollars of Canada Small Business Financing loans from 1999–2000 to 2010–2011. The highest number of loans was during 1999–2000, which had 17 741 loans, followed by 14 442 loans in 2000–2001. For the years ranging from 2001–2002 to 2005–2006, the number of loans stayed around 11 000 loans. In 2006–2007, the total number of loans declined to 9595 and steadily declined to 7466 in 2010–2011. The value of loans was highest in 1999–2000 at 1.3 billion dollars, followed by about 1.1 billion dollars in 2000–2001. After that time, up until 2010–2011, the value of loans stayed about the same and ranged between just under 1 billion dollars to just over 1 billion dollars, with the lowest amount in 2008–2009 at 901 million dollars. In 2010–2011 the value of loans was 1.03 billion dollars.

For more details, see the Appendix, Table 1.

Claims

The claims paid in 2010–11 were associated with loans registered during the period of 1999–2011. There were 1579 claims paid with a value of $80.4 million (see Figure 1B), averaging $50 924 per claim. These claims decreased by approximately 18 percent in number and 26 percent in value from the previous year. Failure to comply with program requirements resulted in the non-payment of 101 claims. On average, claims were processed within 18 working days once all the necessary documentation was received from the lender.

The Directorate received nine appeals of claim decisions. Each appeal is assessed on the basis of any additional information or clarifications. The Directorate rejected eight of these appeals. As of March 31, 2011, one appeal remains to be completed.

Figure 1B: Number and Value of Canada Small Business Financing Claims 1999–2011Footnote 1
Figure 1B: Number and Value of CSBF Claims, 1999–2011
Description of Figure

This vertical bar graph compares the total number of claims and the total value in millions of dollars of Canada Small Business Financing claims from 1999–2000 to 2010–2011. In 1999–2000 there were only 19 claims made compared with 1579 claims in 2010–2011. The total number of claims peaked in 2008–2009 with 1955 claims, followed by the next highest in 2009–2010 with 1933 claims. The value of claims in 2010–2011 was 80.4 million dollars. The value of claims in 2009–2010 was the highest at over 109 million dollars, followed by 2008–2009, which was about 101 million dollars. Just under 500 000 dollars was paid out in 1999–2000 and only 15 million dollars was paid out in claims in 2000–2001. The Canada Small Business Financing Program began on April 1, 1999. Claims are typically submitted within three to four years after loans are made. This explains the rising number of claims later in the life of the program.

For more details, see the Appendix, Table 1.

3.3 Loans and Claims by Province and Territory

The CSBF Program is used by businesses across Canada (see Figure 2). It is demand driven and variations in its use reflect choices made by lenders and borrowers across the country. However, it should be noted that the majority of Canadian small businesses operate in Quebec and Ontario. For 2010–11, the distribution of loans and claims is as follows:

  • The provinces of Quebec and Ontario had the largest share of the registered loans by value with a total of approximately $713.7 million (69 percent) and 4869 by number (65 percent).
  • The western provinces registered 1942 loans (26 percent) or $242.6 million by value (23.6 percent).
  • In the Atlantic provinces, 644 loans were registered (8.6 percent) or $69.3 million by value (6.8 percent).
  • As for claims paid, Quebec and Ontario accounted for $66.8 million (83 percent) of the total value.

The shares of loan and claim values by provinces and territories have remained fairly stable over the last two years.

Figure 2: Percent of Total Value of CSBF Loans and Claims by Province and Territory, 2010–11

Figure 2: Percent of Total Value of CSBF Loans and Claims by Province and Territory, 2010–11
Description of Figure

This map of Canada shows the percentage of the total value of Canada Small Business Financing loans and claims by province and territory for 2010–2011.

The highest percentage of loans was seen in Ontario with 35.2 percent, followed by Quebec at 34.4 percent. The lowest percentage values for loans are in the north with Yukon and Nunavut at zero percent and the Northwest Territories at 0.1 percent. The east also saw low percentage values for loans with Prince Edward Island at 0.2 percent, followed by Newfoundland and Labrador at 1.2 percent, Nova Scotia at 2.1 percent and New Brunswick at 3.3 percent. Western Canada had Alberta with the highest percentage value for loans at 12.5 percent, followed by British Columbia at 5.3 percent, Saskatchewan at 3.4 percent and Manitoba at 2.4 percent.

Similar to loans, the percentage of the total value of Canada Small Business Financing claims in 2010–2011 was highest in Ontario at 50.7 percent, followed by Quebec at 32.3 percent. The lowest percentage of claims was seen in the north with zero percent for Yukon and Nunavut and 0.3 percent for the Northwest Territories. The east also saw low percentage values for claims with Prince Edward Island at 0.2 percent, followed by Newfoundland and Labrador at 0.4 percent, Nova Scotia at 1.9 percent and New Brunswick at 2.5 percent. In the west, British Columbia had the highest percentage value for claims at 5.0 percent, followed by Alberta at 4.0 percent, Manitoba at 1.8 percent and Saskatchewan at 0.8 percent.

For more details, see the Appendix, Table 2.

3.4 Loans and Claims by Size of Loans

In 2010–11, there was a significant increase in the number and value of loans in excess of $250 000 compared to 2009–10, the first year that the maximum loan amount was increased to $500 000. There were 1209 loans (16 percent) in excess of $250 000 with a value of $405.7 million or 40 percent (see Figure 3). This contributed to an increase of approximately $74 million (7.7 percent) in the total value of loans and an increase of 8.7 percent in the average loan size from $126 481 to $137 521. The value of loans between $125 000 and $250 000 was approximately $365.6 million (36 percent by value).

The majority of claims were from loans made between $125 000 and $250 000. These loans resulted in claims being paid of $57.7 million (or 72 percent of total claims paid).

There were 10 claims paid for a total amount of $2.03 million on loans made with a value of more than $250,000. The data on the maximum loan amount will continue to be monitored and analyzed in future annual reports.

Figure 3: Percent of Total Value of CSBF Loans and Claims by Size of Loans, 2010–11

Figure 3: Percent of Total Value of CSBF Loans and Claims by Size of Loans, 2010–11
Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by size of loans for 2010–2011. The percentage of the total value of loans for zero dollars to 125 000 dollars was 24.9 percent, for 125 001 dollars to 250 000 dollars was 35.6 percent, for 250 001 dollars to 375 000 dollars was 31.2 percent and for 375 001 dollars to 500 000 dollars was 8.3 percent. The percentage of the total value for claims for zero dollars to 125 000 dollars was 25.7 percent, for 125 001 dollars to 250 000 dollars was 71.7 percent, for 250 001 dollars to 375 000 dollars was 2.5 percent and there were no claims for 375 001 dollars to 500 000 dollars.

For more details, see the Appendix, Table 3.

3.5 Loans and Claims by Asset Type

Figure 4 illustrates the total value of 2010–11 CSBF Program loans and claims by the type of assets eligible for financing:

  • Equipment accounted for the largest percentage of the total value of both loans (43 percent) and claims (59 percent). Relative to last year, the loan value percentage declined about 2.5 percent while the claim percentage remained stable.
  • Leasehold improvements accounted for 29 percent of the total value of all loans and 34 percent of the total value of claims. This represents a decrease of about 1.5 percent in the value of loans relative to last year. The percentage for claims has remained somewhat stable.
  • Real property represented the smallest percentage of the total value of loans (28 percent) and the total value of claims (7 percent). In comparison to 2009–10, the percentage value of loans for real property increased by approximately 4 percent. Since the maximum loan amount was increased in 2009 from $250 000 to $500 000, the value of loans made for real property increased by 58 percent from $178.5 million in 2008–09 to $282.6 million in 2010–11.

Equipment loans have the lowest average loan value at $102,310. Leasehold improvement loans averaged $161,318. Real property loans had significantly higher average loans at $222,183.

Figure 4: CSBF Loans and Claims by Asset Type, 2010–11

Figure 4: CSBF Loans and Claims by Asset Type, 2010–11
Description of Figure

This figure has two pie charts that break down Canada Small Business Financing loans and claims by asset type for 2010–2011.

Canada Small Business Financing made 7466 loans totalling 1.03 billion dollars. Equipment made up 43.1 percent (442.3 million dollars and 4323 loans) of Canada Small Business Financing loans, followed by leasehold improvements at 29.4 percent (301.8 million dollars and 1871 loans) and real property at 27.5 percent (282.6 million dollars and 1272 loans).

Canada Small Business Financing received 1579 claims totalling 80.4 million dollars. Equipment made up 58.9 percent (47.3 million dollars and 1029 claims), followed by leasehold improvements at 34.3 percent (27.6 million dollars and 436 claims) and real property at 6.8 percent (5.5 million dollars and 114 claims).

3.6 Loans and Claims by Industry Sector

The industry sector in which small businesses operate is part of the information provided by lenders. Based on this information, the following patterns for industry sectors were observed in 2010–11 (see Figure 5):

  • The four main industry sectors by value of lending are: accommodation and food services (27.4 percent), retail trade (16.8 percent), transportation and warehousing (6.5 percent), and manufacturing (6.7 percent).
  • During this reporting period, the value of claims paid to these sectors was as follows: accommodation and food services (34 percent), retail trade (19.7 percent), transportation and warehousing (3.9 percent), and manufacturing (10 percent).

These top four industry sectors together accounted for 57.4 percent of the total value of loans and 67.6 percent of the total value of claims.

Figure 5: Percent of Total Value of CSBF Loans and Claims by Main Industry Sector, 2010–11

Figure 5: Percent of Total Value of CSBF Loans and Claims by Main Industry Sector, 2010–11

Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by main industry sector for 2010–2011.

For Canada Small Business Financing loans, accommodation and food services had the highest percentage of the total value at 27.4 percent, followed by retail trade at 16.8 percent, manufacturing at 6.7 percent, and transportation and warehousing at 6.5 percent.

For Canada Small Business Financing claims, accommodation and food services had the highest percentage of the total value at 34.0 percent, followed by retail trade at 19.7 percent, manufacturing at 10.0 percent, and transportation and warehousing at 3.9 percent.

For more details, see the Appendix, Table 4.

3.7 Loans and Claims by Age of Business

As outlined in Section 1 "Overview of the CSBF Program," one of the indicators of incrementality is the number of start-ups and new businesses that receive loans. In 2010–11, businesses that were in operation for less than one year accounted for more than half of the value of all loans made, that is, $587.9 million or 57 percent of the value (see Figure 6). These businesses accounted for $61.6 million or 77 percent of the claims during this same period. Over the last three years the percentages for loans and claims have remained constant for all businesses irrespective of their age.

Figure 6: CSBF Loans and Claims by Age of Business, 2010–11

Figure 6: CSBF Loans and Claims by Age of Business, 2010–11

Description of Figure

This figure has two pie charts that break down Canada Small Business Financing loans and claims by age of business for 2010–2011.

Canada Small Business Financing made 7466 loans totalling 1.03 billion dollars. Businesses less than 1 year old made up the largest group for loans at 57.3 percent (587.9 million dollars and 3733 loans), followed by businesses more than 3 years old at 31.7 percent (325.8 million dollars and 2752 loans) and businesses 1 to 3 years old at 11.0 percent (113.0 million dollars and 981 loans).

Canada Small Business Financing received 1579 claims totalling 80.4 million dollars. Businesses less than 1 year old made up the largest group for claims at 76.6 percent (61.6 million dollars and 1112 claims), followed by businesses more than 3 years old at 14.0 percent (11.2 million dollars and 270 claims) and businesses 1 to 3 years old at 9.5 percent (7.6 million dollars and 197 claims).

For more details, see the Appendix, Table 5.

3.8 Loans and Claims by Business Size

Businesses with annual revenues less than $1 million accounted for 73 percent of the value and 80 percent of the number of all loans made in 2010–11 as well as 76 percent of the claims paid (see Figure 7). Businesses with revenues between $1 million and $2 million accounted for the next largest percentage of the loan values, 18 percent (13 percent of the number of loans).

Figure 7: Percent of Total Value of CSBF Loans and Claims by Business SizeFootnote 2, 2010–11

Figure 7: Percent of Total Value of CSBF Loans and Claims by Business Size, 2010–11
Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by business size for 2010–2011 based on the borrower's revenue forecasts at the time of loan registration. Canada Small Business Financing loans to borrowers with revenue forecasts of zero to 1 million dollars were highest at 73.3 percent of the total value of loans, followed by borrowers with revenue forecasts of 1 000 001 dollars to 2 million dollars at 17.8 percent, borrowers with revenue forecasts of 2 000 001 dollars to 3 million dollars at 5.6 percent, borrowers with revenue forecasts of 3 000 001 dollars to 4 million dollars at 1.9 percent and borrowers with revenue forecasts of 4 000 001 dollars to 5 million dollars at 1.3 percent.

Canada Small Business Financing claims from borrowers with revenue forecasts of zero to 1 million dollars were highest at 75.7 percent of the total value of claims, followed by borrowers with revenue forecasts of 1 000 001 dollars to 2 million dollars at 17.1 percent, borrowers with revenue forecasts of 2 000 001 dollars to 3 million dollars at 4.7 percent, borrowers with revenue forecasts of 3 000 001 dollars to 4 million dollars at 1.9 percent and borrowers with revenue forecasts of 4 000 001 dollars to 5 million dollars at 0.5 percent.

For more details, see the Appendix, Table 6

3.9 Loans and Claims by Type of Borrower and Business

Type of Borrower

Under the CSBF Program, borrowers can carry on a small business as a corporation, a partnership or as a sole proprietor. In 2010–11, corporations received 91 percent of the total value of loans, partnerships received 3 percent and sole proprietors received 6 percent (see Figure 8). This has remained relatively stable over the last two years. The data for claims show a similar pattern to loans: loans made to corporations resulted in 94 percent of the claims, 2 percent for partnerships and 4 percent for sole proprietors.

Figure 8: Percent of Total Value of CSBF Loans and Claims by Type of Borrower, 2010–11

Figure 8: Percent of Total Value of CSBF Loans and Claims by Type of Borrower, 2010–11
Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by type of borrower for 2010–2011. For Canada Small Business Financing loans, corporations had the highest percentage of the total value at 90.7 percent, followed by sole proprietorships at 6.1 percent and partnerships at 3.3 percent. For Canada Small Business Financing claims, corporations had the highest percentage of the total value at 93.7 percent, followed by sole proprietorships at 4.3 percent and partnerships at 1.9 percent.

For more details, see the Appendix, Table 7.

Type of Business

A franchise is a business relationship between a franchisor and a franchisee where the franchisee is given the right to use the franchisor's name, products and ongoing support. In 2010–11, franchise businesses accounted for 16 percent of the total value of loans and 24 percent of the total value of claims. This represents a 5 percent decrease in the value of loans and a 6 percent increase in the value of claims from 2009–10. The non-franchise businesses accounted for 84 percent of the total value of loans (a 5 percent increase) and 76 percent of the value of claims (a 6 percent decrease).

Footnotes

Footnote 1

The CSBF Program began on April 1, 1999. Claims are typically submitted within three to four years after loans are made. This explains the rising number of claims later in the life of the program.

Return to footnote 1 referrer

Footnote 2

Based on borrower's revenue forecasts at time of loan registration.

Return to footnote 2 referrer

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