November 2007, vol. 9, no. 3 - Financing

Small and Medium-Sized Enterprises in Quebec

Statistics Canada's 2004 Survey on Financing of Small and Medium Enterprises has been used to develop profiles of the financing needs and activities of small and medium-sized firms in each of the five regions of Canada – British Columbia, the Prairie provinces, Ontario, Quebec and the Atlantic provinces. Following the profile of British Columbia in the previous issue of the Small Business Quarterly, below is a summary of the profile for Quebec.

Just over 300 000 SMEs^{Footnote 1} operated in Quebec in 2004. Their size, distribution across industry sectors and financing activities are similar to those observed for all SMEs in Canada. They are mostly very small businesses — 97 percent employ fewer than 20 people. Within this group, 47 percent are self-employed and a further 36 percent have 1–4 employees. SMEs in the province operate in all major industry sectors, with 80 percent in the services sector and 5 percent in knowledge-based industries. The survey also reveals that 22 percent of all SMEs in Quebec applied for some form of external financing in 2004. Of the three types of financing shown in Table 4, there was a higher request rate for debt financing from SME's in Quebec and other provinces.

Table 4: Financing Request and Approval Rates, 2004

Type of Financing		British Columbia	Prairie Provinces	Ontario	Quebec	Atlantic Provinces	Canada
		%
Source: SME Financing Data Initiative, Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2004. * Data not available due to low quality or confidentiality concerns.
Debt Financing	Request Rate	20	23	15	18	20	19
	Approval Rate	82	82	77	88	82	81
Lease Financing	Request Rate	4	5	2	3.2	3	3
	Approval Rate	88	99	98	97	94	96
Equity Financing	Request Rate	1.1	0.9	1.3	1.4	1.7	1.2
	Approval Rate*	78	—	—	—	80	—
Government Grant or Subsidy	Request Rate	1.8	6	1.5	3.1	3.9	3
	Approval Rate	—	72	72	68	80	70

Significant departures from the national average are observed in Quebec. Almost half of all requests for financing were made to chartered banks (49 percent) versus the national rate of 63 percent. This disparity can be explained by the greater reliance in Quebec on credit unions and Caisses populaires (39 percent versus 23 percent of all SMEs in Canada use these financial institutions). As well, reflecting the province's success at raising venture capital, Quebec alone among the regions exhibits a share of national venture capital investments (39 percent) that far exceeds its share of knowledge-based industries (17 percent).

The profiles for the regions in this series can be found on the SME Financing Data Initiative website at www.sme-fdi.gc.ca.

^{Footnote 1} SMEs are defined as having fewer than 500 employees and less than $50 million in annual revenues.

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