Financing Statistics–November 2013

Special edition of Key Small Business Statistics

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Table of Contents


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Highlights

SME Business and Owner Characteristics—2011

  • What attributes characterized Canadian small and medium-sized enterprises (SMEs)?Footnote 1
    • There were approximately 1.1 million employer SMEs in Canada in 2011.
    • About 71.4 percent of SMEs operated in the services sector, the remainder being goods-producing businesses (28.6 percent). The majority of SMEs were in the construction (15.2 percent), retail trade (13.7 percent) or professional services sectors (11.7 percent).
    • The geographic distribution of SMEs is proportional to the overall distribution of the working-age population, with the majority of businesses located in Ontario and Quebec.
    • About 43.7 percent of SMEs within Canada have been in operation for 20 years or more, whereas only 4.9 percent of SMEs have been in business for 2 years or less.
    • Small businesses represented almost all SMEs in Canada (99 percent).
  • What attributes characterized SME business owners?
    • The majority (66.7 percent) of SME owners had some post-secondary education.
    • Only 1.6 percent of SME owners were less than 30 years of age, whereas 48.4 percent were between 50 and 64 years of age.
    • About 77 percent of SME owners had 10 years of management experience or more.

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Financing Needs—2011

  • What external sources of financing did Canadian SMEs use in 2011?
    • To support start-up, 79.5 percent of SMEs used the personal savings of the business owner and 40.9 percent used credit from financial institutions. These sources of financing were also used most often to support business acquisitions.
  • What proportion of SMEs sought external financing?
    • Request rates were 25.5 percent for debt financing, 6.9 percent for lease financing, 2.3 percent for equity financing, 8.1 percent for trade credit and 3.7 percent for government financing.
  • For what reasons did SMEs seek external financing?
    • SMEs sought debt financing primarily for working capital (51.3 percent), to purchase machinery or equipment (25.8 percent) and to purchase vehicles (19.1 percent).
    • SMEs sought lease financing primarily to rent vehicles (34.6 percent) and machinery and equipment (28.1 percent), and to rent business or office space (23.6 percent).
  • For what reasons did SMEs not seek financing?
    • The main reason cited by business owners for not seeking financing was that it was not needed (88 percent). Another 2.9 percent of SMEs did not seek financing because they thought their request would be turned down.
  • From which financial institutions did SMEs seek financing?
    • Loans from domestic chartered banks supplied nearly half (45 percent) of the total value and almost 43 percent of the total number of SME loans, the balance being supplied by other banks, credit unions / Caisses populaires and other lending institutions.

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Access to Financing for SMEs—2011

  • How many SMEs received the financing they requested?
    • Approval rates were 89.9 percent for debt financing, 97.4 percent for lease financing, 75.5 percent for equity financing, 98.5 percent for trade credit and 83.8 percent for government financing.
    • Total debt financing approved was $23.5 billion, or $172,000 per business.
  • What types of collateral were requested by debt suppliers?
    • The majority of SMEs (65 percent) were asked to provide collateral to guarantee their loans. Business (74.5 percent) and personal assets (39.7 percent) were the two main types of collateral pledged.
  • For which type of SME was debt financing most difficult to obtain?
    • Debt financing was relatively more difficult to obtain for start-ups (less than 2 years old), young businesses (between 2 and 10 years old), and businesses in the accommodation and food services sector, with authorized-to-requested ratios of about 81 percent, 86 percent and 83 percent respectively.
  • For what reasons were SMEs denied debt financing?
    • The main reason SMEs were denied debt financing was insufficient collateral (47.6 percent). Project riskiness (36.8 percent) and insufficient sales or cash flow (35.9 percent) were two other common reasons cited for being denied financing.
  • What percentage of SMEs were delinquent on their loan repayments?
    • By the end of 2011, SME delinquency rates were back to pre-recession levels (0.32 percent), a significant drop from the high of 1.41 percent reached in Q2 2009.
  • To what extent was access to financing an obstacle to SME growth?
    • About 17 percent of SMEs considered obtaining financing to be an obstacle to growth. This is low compared with the 63 percent of SMEs that considered the rising cost of inputs an obstacle and the 38 percent of SMEs that considered devoting too much time to day-to-day operations an obstacle.

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Introduction

Small and medium-sized enterprises (SMEs) play a major role in the Canadian economy. They account for over 99 percent of the total 1.1 million employer businesses operating in Canada and employ nearly 90 percent of Canada's private sector workforce. About 98 percent of all of Canada's exporters are SMEs. Given this role in the economy, it is important that SMEs have access to the financing they need to grow and thrive. Insufficient access to financing can lead to liquidity shortages, stagnant growth and reduced market competitiveness. It can also make it difficult for businesses to pursue new innovations and expand into new markets.

Industry Canada conducts regular surveys to monitor financing conditions for SMEs, often in partnership with Statistics Canada. The objective of the surveys is to help government develop a clear understanding of SMEs' demand for, and sources of, financing and track changes over time. The Survey on Financing and Growth of Small and Medium EnterprisesFootnote 2 is the main survey conducted by Industry Canada and Statistics Canada and relied upon by policy-makers. It is conducted every three years and gathers information on SME financing request rates, approval rates, amounts requested, amounts supplied, reasons for seeking financing and reasons for being denied financing. The survey also gathers information on the financing application process, firm profiles and the demographic characteristics of business owners. In addition to the Survey on Financing and Growth of Small and Medium Enterprises, this report also used data from Statistics Canada's Business Register, the Bank of Canada's Senior Loan Officer Survey, Statistics Canada's Survey of Suppliers of Business Financing and PayNet's Canadian Business Trends. Together, these sources provide a comprehensive overview of the SME financing landscape in Canada in 2011.

The purpose of this report is to present high-level findings from the 2011 survey, which included almost 10,000 survey respondents. A series of profile papers and technical papers will follow, examining key issues for policy-makers. The report is broken down into three sections: (1) SME Business and Owner Characteristics; (2) Financing Needs; and (3) Access to Financing for SMEs. The appendices accompanying this report provide detailed breakdowns of the data across business size, industry and age categories. All survey results are available on this website.


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SMEs Defined

The term "business" refers to registered business establishments. To be included in our sample population, a business establishment must meet one of the following criteria: have at least one paid employee (with payroll deductions remitted to the Canada Revenue Agency (CRA)), have annual sales revenues of $30,000, or be incorporated and have filed a federal corporate income tax return at least once in the previous three years. As Industry Canada uses a definition based on the number of paid employees in this publication, our analysis excludes the self-employedFootnote 3 and "indeterminate"Footnote 4 businesses. Also excluded from the sample population are businesses in the following industrial sectors: public administration, including schools and hospitals; public utilities; and non-profit associations.Footnote 5

The size of a business establishment can be defined in many ways: annual sales or shipments, annual gross or net revenue, assets or number of employees. Among these measures, the approach using the number of employees to determine the size of businesses is widely used to categorize businesses. Data for this measure are often easiest to collect from surveyed businesses and help to facilitate cross-country comparisons. Accordingly, in this report, an SME is a business establishment with 1–499 paid employees, more specifically:

  • A small business has 1 to 99 paid employees.Footnote 6
  • A medium-sized business has 100 to 499 paid employees.
  • A large business has 500 or more paid employees.

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I. SME Business and Owner Characteristics

What attributes characterized Canadian SMEs?

The distribution of SMEs by region, sector, size of business and age of business is presented in Figures 1–4.

In 2011, there were approximately 1.1 million employer SMEs in Canada. The location of these enterprises is governed primarily by population density and other factors, such as sector concentration. Figure 1 compares the distribution of SMEs by region. The geographic distribution of SMEs is proportional to the overall distribution of the working-age population, with the majority (55.8 percent) of businesses located in Ontario and Quebec.

Figure 1: Distribution of SMEs and Working-Age Population by Region, 2011

Figure 1: Distribution of SMEs and Working-Age Population by Region, 2011 (the long description is located below the image)
Source: Statistics Canada, Business Register, 2011.
Description of Figure 1
Figure 1: Distribution of SMEs and Working-Age Population by Region, 2011
Region SMEs Working-Age Population
Atlantic 7.0% 7.0%
Quebec 21.2% 23.5%
Ontario 34.6% 39.0%
Saskatchewan and Manitoba 6.9% 6.3%
Alberta 12.9% 10.7%
British Columbia and Territories 17.4% 13.5%

Assessing the sectoral distribution of SMEs within Canada in 2011 revealed that 71.4 percent of SMEs operated in the services sector (Figure 2), including 13.7 percent in retail trade, 11.7 percent in professional services and 18.6 percent in other sectors. The remaining SMEs were in the goods-producing sector (28.6 percent), with 6.7 percent in primary industries, 15.2 percent in construction and 6.7 percent in manufacturing.

Figure 2: Distribution of SMEs by Sector, 2011

Figure 2: Distribution of SMEs by Sector, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note: Other sectors includes health care and social assistance; information and cultural industries; and arts, entertainment and recreation.
Description of Figure 2
Figure 2: Distribution of SMEs by Sector, 2011
Primary Industries 6.7%
Construction 15.2%
Manufacturing 6.7%
Wholesale Trade 6.2%
Retail Trade 13.7%
Transportation and Warehousing 5.0%
Professional Services 11.7%
Accommodation and Food Services 8.8%
Other Services 7.5%
Other Sectors 18.6%

Survey results indicate that small businesses represent the majority (99 percent) of SMEs in Canada (Figure 3). Approximately half (53 percent) were micro-enterprises (1–4 employees), whereas only 1 percent were medium-sized enterprises (100–499 employees).

Figure 3: Distribution of SMEs by Size of Business, 2011

Figure 3: Distribution of SMEs by Size of Business, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 3
Figure 3: Distribution of SMEs by Size of Business, 2011
1–4 Employees 53.0%
5–19 Employees 35.5%
20–99 Employees 10.5%
100–499 Employees 1.0%

In 2011, 4.9 percent of SMEs had been in business for 2 years or less (Figure 4), 27 percent for 3 to 10 years and 24.3 percent for 11 to 20 years. About 43.7 percent of SMEs had been in operation for more than 20 years.

Figure 4: Distribution of SMEs by Age of Business, 2011

Figure 4: Distribution of SMEs by Age of Business, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 4
Figure 4: Distribution of SMEs by Age of Business, 2011
2 years or younger 4.9%
3–10 years 27.0%
11–20 years 24.3%
More than 20 years 43.7%

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What attributes characterized SME business owners?

The distribution of SMEs by education level of owner, age of owner, experience managing a business and primary language is presented in Figures 5–8.

In 2011, the majority of SME owners had some post-secondary education (66.7 percent) (Figure 5). About 32.1 percent of SME owners had a college degree, whereas 23.8 percent of SME owners had a high school diploma. Fewer than 10 percent of SME owners had less than a high school diploma.

Figure 5: Distribution of SMEs by Education Level of Owner, 2011

Figure 5: Distribution of SMEs by Education Level of Owner, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 5
Figure 5: Distribution of SMEs by Education Level of Owner, 2011
Less than High School 9.5%
High School 23.8%
College 32.1%
Bachelor's 21.8%
Master's or Above 12.8%

About 1.6 percent of SME owners in Canada were less than 30 years of age (Figure 6). Fewer than 11 percent were between 30 and 39 years of age, and approximately half (48.4 percent) of SME owners were between 50 and 64 years of age.

Figure 6: Distribution of SMEs by Age of Owner, 2011

Figure 6: Distribution of SMEs by Age of Owner, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 6
Figure 6: Distribution of SMEs by Age of Owner, 2011
Less than 30 years 1.6%
30–39 years 10.6%
40–49 years 28.2%
50–64 years 48.4%
65+ years 11.3%

Only 5 percent of SME owners had less than 5 years of management experience (Figure 7). About 18 percent of SME owners had between 5 and 10 years of management experience and 77 percent had 10 years of management experience or more.

Figure 7: Distribution of SMEs by Experience Managing a Business, 2011

Figure 7: Distribution of SMEs by Experience Managing a Business, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 7
Figure 7: Distribution of SMEs by Experience Managing a Business, 2011
Less than 5 years 5.0%
5–10 years 17.8%
10+ years 77.2%

Approximately three quarters (78 percent) of SME owners were born in Canada. The majority (61 percent) spoke English as their primary language, while 22 percent spoke French as their primary language (Figure 8).

Figure 8: Distribution of SMEs by Primary Language, 2011

Figure 8: Distribution of SMEs by Primary Language, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 8
Figure 8: Distribution of SMEs by Primary Language, 2011
English 60.5%
French 21.8%
Other 17.8%

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II. Financing Needs

What external sources of financing did Canadian SMEs use in 2011?

The financing needs of firms evolve as they age and grow. In 2011, about 39 percent of start-up businesses requested financing, but only 34 percent of businesses that had been in operation for 20 years or more requested financing. Sources of financing used by SMEs at the start-up stage are not the same as those used by established SMEs that have built up equity and collateral. Sources of financing can be broadly categorized as formal or informal. Informal financing can include owners' savings, personal loans taken out by owners, and loans from friends, family members or employees. Commercial loans, lease financing, supplier credit and government grants can be categorized as formal sources of financing.

Start-up SMEs often lack both a credit history and the collateral needed to secure a loan, thus they represent a degree of risk many financial institutions are not prepared to take. As a result, start-ups typically use informal sources of external financing and rely on owners' personal savings and credit to finance their operations.

The financing instrument most often used by SMEs to support start-up was the personal savings of the business owner (79.5 percent) (Figure 9), followed by credit from financial institutions (40.9 percent). In total, start-up SMEs requested about $500 million in debt financing in 2011, or $70,000 per business. Trade credit from suppliers (18.5 percent), loans from friends/relatives (14.5 percent) and retained earnings from previous or other businesses (13 percent) were also heavily used. About 14.9 percent of SMEs used lease financing to support start-up. In 2011, lease financing requests by start-up SMEs totalled $102 million, or $48,000 per business. Government credit/grants were relied upon by 6.4 percent of SMEs. Only 0.6 percent of SMEs used venture capital financing to support start-up.

Figure 9: Financing Instruments Used for Start-Up, 2011 Note * referrer of Figure 9

Figure 9: Financing Instruments Used for Start-Up, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 9: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 9
Figure 9: Financing Instruments Used for Start-Up, 2011
Personal Financing 79.5%
Credit from Financial Institutions 40.9%
Trade Credit from Suppliers 18.5%
Leasing 14.9%
Loans or Equity from Friends or Relatives of Business Owner 14.5%
Retained Earnings from Previous or Other Businesses 13.0%
Credit from Government or Government Grants 6.4%
Loans from Individuals Unrelated to the Business 3.6%
Other 1.9%
Venture Capital Funds 0.6%

Financing instruments used to support business acquisitionsFootnote 7 included personal financing (66.8 percent), credit from financial institutions (54 percent) and loans/equity from friends (21.8 percent) (Figure 10). These findings confirm the importance of financing not only for start-ups but also for business acquisitions. Retained earnings from previous businesses (16.5 percent) was one other important source of financing for business acquisitions. Other instruments (5.8 percent) and venture capital funds (1.3 percent) were relied upon by only a small percentage of businesses.

Figure 10: Financing Instruments Used for Business Acquisitions, 2011 Note * referrer of Figure 10

Figure 10: Financing Instruments Used for Business Acquisitions, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 10: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 10
Figure 10: Financing Instruments Used for Business Acquisitions, 2011
Personal Financing 66.8%
Credit from Financial Institutions 54.0%
Loans or Equity from Friends or Relatives of Business Owner 21.8%
Retained Earnings from Previous or Other Businesses 16.5%
Credit from Government or Government Grants 8.8%
Loans from Individuals Unrelated to the Business 6.2%
Other 5.8%
Venture Capital Funds 1.3%

Businesses require financing not only for acquisitions and start-up, but also for day-to day operations. Figure 11 presents financing instruments used by SMEs for day-to-day operations in Canada in 2007.Footnote 8 The most important financing instrument used was commercial or personal loans from financial institutions (64 percent). Informal sources of financing, such as retained earnings (57 percent) and personal savings of business owners (54 percent), were also heavily relied upon for day-to-day operations. Micro-credit (2 percent) and loans from employees (1 percent) were used by some SMEs but, in general, were used only minimally. Government lending was used by 7 percent of SMEs for day-to-day operations.

Figure 11: Financing Instruments Used for Day-to-Day Operations, 2007 Note * referrer of Figure 11

Figure 11: Financing Instruments Used for Day-to-Day Operations, 2007 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007.
Note * of Figure 11 Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 11
Figure 11: Financing Instruments Used for Day-to-Day Operations, 2007
Commercial or Personal Loans from Financial Institutions 64.0%
Retained Earnings 57.0%
Personal Savings 54.0%
Leasing 22.0%
Trade Credit Owing to Suppliers 21.0%
Loans from Friends or Relatives 9.0%
Credit from Government Lending 7.0%
Loans from Individuals Unrelated to Firm 4.0%
Other Sources of Financing 3.0%
Micro-Credit 2.0%
Loans from Employees 1.0%

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What proportion of SMEs sought external financing?

Overall, 36 percent of SMEs requested external financing in 2011. The debt financing request rate was 25.5 percent compared with 13 percent in 2007 (Figure 12).Footnote 9 The value of requests totalled over $25 billion, or about $184,000 per business. About 7 percent of SMEs requested lease financing in 2011, a significant drop from 17 percent in 2007. Lease financing requests totalled $2.5 billion, or about $67,000 per business. About 2.3 percent of SMEs requested equity financing and about 8 percent of SMEs requested trade credit. Lastly, about 4 percent of SMEs requested government financingFootnote 10 in 2011 compared with 10 percent in 2007.

Figure 12: Financing Request Rates by Type of Financing, 2007 and 2011

Figure 12: Financing Request Rates by Type of Financing, 2007 and 2011 (the long description is located below the image)
Sources: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007; Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 12
Figure 12: Financing Request Rates by Type of Financing, 2007 and 2011
Type of Financing 2007 2011
Debt 13.0% 25.5%
Lease 17.0% 6.9%
Equity 3.0% 2.3%
Trade Credit 29.0% 8.1%
Government 10.0% 3.7%

Among different categories of businesses, those with the greatest requests for financing were generally businesses with more employees, export-oriented businesses and/or innovative businesses (see Annex, Table 1). They also tended to be businesses that had greater intentions to grow and had greater intentions to expand sales into new domestic and international markets.


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For what reasons did SMEs seek external financing?

In 2011, SMEs intended to use debt financing primarily for working capital (51.3 percent), to purchase machinery or equipment (25.8 percent) and to purchase vehicles (19.1 percent) (Figure 13). Other intended uses included purchasing land/buildings (17.4 percent) and computer hardware/software (10.9 percent). To a lesser degree, SMEs intended to use debt financing to fund debt consolidation (7.6 percent) and research and development (4.9 percent).

Figure 13: Intended Uses of Debt Financing, 2011 Note * referrer of Figure 13

Figure 13: Intended Uses of Debt Financing, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 13: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 13
Figure 13: Intended Uses of Debt Financing, 2011
Working Capital/Operating Capital 51.3%
Other Machinery or Equipment 25.8%
Vehicles/Rolling Stock 19.1%
Land and/or Buildings 17.4%
Computer Hardware/Software 10.9%
Other 10.8%
Enter a New Market 10.0%
Debt Consolidation 7.6%
Research and Development 4.9%

SMEs intended to use lease financing primarily to rent vehicles (34.6 percent) and machinery and equipment (28.1 percent), and to rent business or office space (23.6 percent) (Figure 14). To a lesser extent, SMEs intended to use lease financing to rent computer hardware/software (6.8 percent).

Figure 14: Intended Uses of Lease Financing, 2011 Note * referrer of Figure 14

Figure 14: Intended Uses of Lease Financing, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 14: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 14
Figure 14: Intended Uses of Lease Financing, 2011
Vehicles 34.6%
Other Machinery or Equipment 28.1%
Business or Office Space 23.6%
Other 6.9%
Computer Hardware/Software 6.8%

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For what reasons did SMEs not seek financing?

The main reason cited by business owners for not seeking financing was that it was not needed (88 percent) (Figure 15). This result is almost identical to what was found in previous years. Other reasons were that the application process was too difficult / time consuming (2.4 percent) and that the cost of financing was too high (1.1 percent). As well, 2.9 percent of SMEs did not request financing because they thought their request would be turned down. Such borrowers are known as discouraged borrowers.Footnote 11 The absence of discouraged borrowers from the overall request rates could mean that the rates underestimate the true financing needs of SMEs.

Figure 15: Reasons for Not Requesting Financing

Figure 15: Reasons for Not Requesting Financing (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 15
Figure 15: Reasons for Not Requesting Financing
Financing Not Needed 88.0%
Other 12.0%
Thought Request Would be Turned Down 2.9%
Application Process Difficult / Time Consuming 2.4%
Cost of Financing Too High 1.1%
Other 5.6%

It is interesting to note that businesses with some of the greatest financing needs, i.e., young entrepreneurs, exporters and innovators, were also the most discouraged. For instance, about 6.6 percent of businesses that had been in operation for 2 years or less were discouraged compared with only 1.2 percent of businesses that had been in operation for 20 years or more. Similarly, about 3.6 percent of export-oriented businesses were discouraged compared with 2.8 percent of non-exporters (see Annex, Table 1).


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From which financial institutions did SMEs seek financing?

The distribution of SME loans by value reveals that domestic chartered banks supplied nearly half (49 percent) of all loans in 2011 (Figure 16).Footnote 12 Credit unions / Caisses populaires (17.4 percent) were the second largest suppliers. Finance companies were other important suppliers, providing 14.7 percent of total SME debt.

Figure 16: Value of Loans by Type of Financial Institution

Figure 16: Value of Loans by Type of Financial Institution (the long description is located below the image)
Source: Statistics Canada, Survey of Suppliers of Business Financing, 2011.
Note: Numbers might not add to 100 percent due to rounding.
Description of Figure 1
Figure 16: Value of Loans by Type of Financial Institution
Domestic Banks 49.2%
Credit Unions, Caisses populaires 17.4%
Financing Companies 14.7%
Other Banks 10.0%
Insurance Companies and Portfolio Managers 8.6%

Most loans, measured by the number of loans, were supplied by domestic chartered banks (71.1 percent), finance companies (12.7 percent) and credit unions / Caisses populaires (9.3 percent) (Figure 17).

Figure 17: Number of Loans by Type of Financial Institution

Figure 17: Number of Loans by Type of Financial Institution (the long description is located below the image)
Source: Statistics Canada, Survey of Suppliers of Business Financing, 2011.
Note: Numbers might not add to 100 percent due to rounding.
Description of Figure 17
Figure 17: Number of Loans by Type of Financial Institution
Domestic Banks 71.7%
Financing Companies 12.7%
Credit Unions, Caisses populaires 9.3%
Other Banks 6.0%
Insurance Companies and Portfolio Managers 0.3%

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III. Access to Financing for SMEs

How many SMEs received the financing they requested?

Overall, approval rates for SME financing in 2011 were 89.9 percent for debt financing, 97.4 percent for lease financing, 75.5 percent for equity financing, 98.5 percent for trade credit and 83.8 percent for government financing (Figure 18).Footnote 13 Since 2007, approval rates have increased across all categories except trade credit. Total approved amounts in 2011 were $23.5 billion, or $172,000 per business, for debt financing; $2.5 billion, or $65,000 per business, for lease financing; and $3.3 billion, $4.1 billion and $2.3 billion for equity, trade credit and government financing or $293,000, $91,000 and $123,000 per business respectively.

Figure 18: Financing Approval Rates

Figure 18: Financing Approval Rates (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 18
Figure 18: Financing Approval Rates
2007 2011
Debt 87.0% 89.9%
Lease 92.0% 97.4%
Equity 72.0% 75.5%
Trade Credit 99.0% 98.5%
Government 81.0% 83.8%

Overall, debt financing accounted for 65.8 percent of the total value of financing supplied to SMEs in 2011. Lease financing accounted for 7.0 percent, equity financing for 9.2 percent, trade credit for 11.5 percent and government financing for 6.4 percent.


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How has access to financing changed between 2007 and 2011?

The results of the Bank of Canada's Senior Loan Officer Survey from 2007 to 2011 are presented in Figure 19. The survey gathers the opinions of senior loan officers within select financial institutions. Tightening/easing is measured by a balance of opinion, which is expressed as "tightened" responses minus "eased" responses. The balance of opinion measure is separated into price factors and non-price factors. Price factors include interest rates on loans, while non-price factors include general standards or terms of credit, such as collateral.

Figure 19: Pricing and Non-Pricing Lending Conditions

Figure 19: Pricing and Non-Pricing Lending Conditions (the long description is located below the image)
Source: Bank of Canada, Senior Loan Officer Survey, 2011.
Description of Figure 19
Figure 19: Pricing and Non-Pricing Lending Conditions
Pricing Non-Pricing
Q4 2006 −21.2 −13.0
Q1 2007 −23.8 −20.0
Q2 2007 29.0 38.4
Q3 2007 41.0 53.8
Q4 2007 46.8 37.1
Q1 2008 46.5 31.5
Q2 2008 46.5 53.0
Q3 2008 80.1 71.5
Q4 2008 81.7 38.9
Q1 2009 42.6 24.2
Q2 2009 5.5 7.8
Q3 2009 −14.7 −2.7
Q4 2009 −25.3 −12.6
Q1 2010 −36.8 −12.7
Q2 2010 −30.3 −14.2
Q3 2010 −47.6 −25.2
Q4 2010 −49.1 −14.3
Q1 2011 −57.1 −42.2
Q2 2011 −33.5 −20.3
Q3 2011 2.0 −14.7
Q4 2011 −20.9 −12.9

Due to various economic shocks, credit conditions between 2007 and 2011 were volatile. The U.S. Subprime Mortgage Crisis of 2007, which preceded the Eurozone Crisis, caused lending conditions worldwide to tighten. The Canadian economy was not immediately affected by these crises. By 2007, however, credit markets in Canada did tighten and this continued through most of 2009 as the economy slipped into recession. As the economy began to recover in 2010, credit conditions began to ease and, as of the end of 2011, this easing was continuing.


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What types of collateral were requested by debt suppliers?

Financial institutions often require SMEs seeking financing to provide collateral as security. Collateral can take the form of land, buildings, or other business or personal assets that can be used as security for the debt. The amount of collateral required is directly linked to the perceived default risk. In 2011, 65 percent of SMEs seeking financing were asked to provide collateral to guarantee their financing compared with 49 percent of SMEs being asked to pledge collateral in 2007, highlighting lenders' stricter underwriting standards in 2011.

Results from 2011 also showed that sector and firm size generally had a bearing on requests for collateral; for example, 76.6 percent of SMEs with 100–499 employees were asked to pledge collateral compared with 63.2 percent of SMEs with 1–4 employees. Furthermore, 36 percent of SMEs operating in the accommodation and food services sector were asked to pledge collateral compared with 82.3 percent of SMEs operating in the primary sector. One factor explaining the low request rates for collateral in some sectors is that businesses in those sectors sought less mortgage and term financing and more credit cards and lines of credit as credit cards and lines of credit are financing instruments that are more easily obtainable without security.

Business assets were the main (74.5 percent) type of collateral pledged by SMEs in 2011, followed by personal assets of business owners (39.7 percent), other types of collateral (11.1 percent) and intellectual property (2 percent) (Figure 20).

Figure 20: Types of Collateral Pledged, 2011 Note * referrer of Figure 20

Figure 20: Types of Collateral Pledged, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 20: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 20
Figure 20: Types of Collateral Pledged, 2011
Business Assets 74.5%
Personal Assets 39.7%
Other 11.1%
Patents, Trademarks and Intellectual Property 2.0%

It is interesting to note that some categories of businesses that were more likely to be asked to pledge collateral were also more likely to benefit from a lower interest rate on loans. For instance, while 82.3 percent of businesses in the primary sector were asked to pledge collateral compared with 36 percent of businesses in the accommodation and food services sector, businesses in the primary sector also paid, on average, a 1.5-percent lower interest rate on their loans. Similarly, while 76.6 percent of businesses with 100–499 employees were asked to pledge collateral compared with 63.2 percent of businesses with 1–4 employees, businesses with 100–499 employees paid, on average, a 2.3-percent lower interest rate on their loans.


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For which type of SME was debt financing most difficult to obtain?

The debt request rate is compared with the authorized-to-requested ratio by sector, size of business, owner gender, export orientation, business age and innovation activity in Figure 21. The average request rate across all SMEs in 2011 was 25.5 percent and the average authorized-to-requested ratio was 94 percent.

Figure 21: Authorized-to-Requested Ratio versus Debt Request Rate by Category of SME, 2011

Figure 21: Authorized-to-Requested Ratio versus Debt Request Rate by Category of SME, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Description of Figure 21
Figure 21: Authorized-to-Requested Ratio versus Debt Request Rate by Category of SME, 2011
Debt Requested Rate (%) Authorized-to-Requested Ratio (%)
1–4 Employees 19.9 90.4
5–19 Employees 29.9 88.6
20–99 Employees 36.9 97.2
100–499 Employees 47.6 99.0
Primary Industries 40.9 95.2
Construction 28.8 93.9
Manufacturing 33.0 96.6
Wholesale Trade 26.6 94.1
Retail Trade 23.1 97.5
Transportation and Warehousing 31.7 93.2
Professional, Scientific and Technical Services 21.0 86.7
Accommodation and Food Services 24.6 83.0
Other Services 20.6 94.1
Other Sectors 19.7 93.1
Knowledge-Based Industries (KBI) 26.6 90.1
Rural 28.7 94.1
Urban 24.7 94.0
Start-Ups 27.5 81.0
2–10 Years 27.1 86.3
11–20 Years 25.5 94.1
More than 20 Years 24.4 96.6
Exporter 29.2 95.6
Non-Exporter 25.1 93.6
Majority Male-Owned 32.2 94.7
Majority Female-Owned 25.2 89.3
Innovator 30.8 92.2
Non-Innovator 22.8 93.5
Young Entrepreneurs 32.5 93.9
Average 25.5 94.0

Start-ups (businesses 2 years or younger) had more difficulty accessing the financing they needed with a request rate of approximately 27.5 percent and an authorized-to-requested ratio of approximately 81 percent. In addition, young businesses (businesses between 2 and 10 years old) had a request rate of 27.1 percent and a ratio of 86.3 percent. The accommodation and food services sector had the lowest authorized-to-requested ratio at 83 percent. Majority female-owned businesses (50 percent to 100 percent ownership) had a request rate of 25.2 percent and an authorized-to-requested ratio of 89.3 percent, whereas majority male-owned businesses had a request rate of 32.2 percent and an authorized-to-requested ratio of 94.7 percent. Businesses with more employees and those in the primary and manufacturing sectors had the least difficulty accessing financing.

It is interesting to note that businesses that faced the greatest difficulty accessing financing, i.e., start-ups, small businesses, knowledge-based businesses, accommodation and food services businesses, and professional services businesses, also tended to have less collateral to pledge as security.


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For what reasons were SMEs denied debt financing?

Insufficient collateral was the most common reason cited by business owners for being denied debt financing (47.6 percent) (Figure 22). Project riskiness (36.8 percent) and insufficient sales or cash flow (35.9 percent) were two other common reasons cited for being denied financing. Operating in an unstable industry (31.4 percent) or a poor credit history or lack of a credit history (21.4 percent) were also frequently cited. Operating in an unstable industry was a particular issue in the accommodation and food services sector where 86 percent of SMEs denied financing were denied because the sector was considered too unstable.

Figure 22: Reasons SMEs Were Denied Debt Financing, 2011 Note * referrer of Figure 22

Figure 22: Reasons SMEs Were Denied Debt Financing, 2011 (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 22: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 22
Figure 22: Reasons SMEs Were Denied Debt Financing, 2011
Reasons for Denial of Debt Request % of Total SMEs
Insufficent Collateral 47.6
Project Was Considered Too Risky 36.8
Insufficent Sales or Cashflow 35.9
Business Operates in an Unstable Industry 31.4
Poor or Lack of Experience or History 21.4
Other Reason 21.6
No Reason Given By Credit Provider 2.6

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What percentage of SMEs were delinquent on their loan repayments?

Delinquent firms are firms that are late in making principal and/or interest payments to lenders. SME 90-day delinquency rates are presented in relation with gross domestic product for the 2007–2011 period in Figure 23. This figure is particularly useful for highlighting SME liquidity issues.

Figure 23: SME 90-Day Delinquency Rate, 2007–2011

Figure 23: SME 90-Day Delinquency Rate, 2007-2011 (the long description is located below the image)
Sources: PayNet Inc.; Statistics Canada and Industry Canada calculations.
Description of Figure 23
Figure 23: SME 90-Day Delinquency Rate, 2007–2011
GDP 90-Day Delinquency Rate
Q1 2007 100 0.8%
Q2 2007 100.7 0.9%
Q3 2007 101.2 0.9%
Q4 2007 101.4 1.0%
Q1 2008 101.5 1.0%
Q2 2008 101.8 1.1%
Q3 2008 102.1 1.1%
Q4 2008 101.1 1.3%
Q1 2009 98.5 1.4%
Q2 2009 97.8 1.6%
Q3 2009 98.2 1.5%
Q4 2009 99.2 1.3%
Q1 2010 100.8 1.0%
Q2 2010 101.6 0.8%
Q3 2010 102.3 0.7%
Q4 2010 103.1 0.6%
Q1 2011 104.2 0.6%
Q2 2011 104.2 0.7%
Q3 2011 104.9 0.7%
Q4 2011 105.3 0.7%

In Q1 2007, prior to the recession, the SME delinquency rate was 0.53 percent. As the recession unfolded, many SMEs started to experience liquidity issues. Consequently, SME delinquency rates started to climb and reached a high of 1.41 percent in Q2 2009. Rates remained high throughout most of 2009 and the early part of 2010. As the economy picked up, however, delinquency rates fell and by the end of 2011 had returned to pre-recession levels (0.32 percent).

Considering the full 2007–2011 period, small business 90-day delinquency rates averaged 0.96 percent compared with 0.22 percent for medium-sized businesses. This helps explain why small businesses had a lower loan approval rate and authorized-to-requested ratio than medium-sized businesses. Above average 90-day delinquency rates for businesses in the accommodation and food services sector (1.99 percent) also help explain why businesses in this sector faced relatively greater difficulty accessing financing.


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To what extent was access to financing an obstacle to SME growth?

Internal and external obstacles to growth for Canadian SMEs are compared in Figure 24. The most significant internal obstacle was recruiting/retaining employees (39 percent). It was a particular challenge for medium-sized businesses, with 57.2 percent identifying it as an obstacle to growth. It was also a major barrier for businesses in the accommodation and food services sector, with 58.3 percent of businesses in this sector identifying it as an obstacle. Devoting too much time to day-to-day operations was another significant obstacle to growth (38.4 percent). Maintaining sufficient cash flow (37.2 percent), managing debt levels (18.3 percent) and insufficient monitoring of business operations (16.3 percent) were also identified as significant obstacles to growth, particularly by Canada's young businesses and innovative businesses. While being of greater concern to businesses in the knowledge-based industries sector, SMEs overall felt that a lack of knowledge about competitors / market trends (13.3 percent) was the internal obstacle of least concern.

Figure 24: Obstacles to Growth Note * referrer of Figure 24

Figure 24: Obstacles to Growth (the long description is located below the image)
Source: Statistics Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2011.
Note * of Figure 24: Multiple responses were possible, so estimates will not add up to 100 percent.
Description of Figure 24
Figure 24: Obstacles to Growth
% of Total SMEs
External Reasons
Obtaining Financing 16.8
Other 22.2
Shortage of Labour 33.1
Government Regulations 33.5
Increasing Competition 47.9
Fluctuations in Demand 52.2
Rising Costs of Inputs 63.2
Internal Reasons
Other 9.4
Lack of Knowledge about Competitors or Market Trends 13.3
Lack of Monitoring Business Operations 16.3
Managing Debt Levels 18.3
Maintaining Sufficent Cash Flow 37.2
Devoting too Much Time to Day-to-Day Operations 38.4
Recruiting and Retaining Employees 39.0

Among businesses of all sizes and across almost all sectors, the greatest external obstacle to growth was the rising cost of inputs (63.2 percent). Only within the professional, scientific and technical services sector were firms more concerned with fluctuations in demand. Overall, increasing competition was another significant external obstacle to growth (47.9 percent). This was of particular concern to businesses in the wholesale trade, retail trade, and accommodation and food services sectors. About 33.5 percent of SMEs reported that government regulations were a significant obstacle to growth. Lastly, while SMEs overall felt that obtaining financing was the external obstacle of least concern, it was still significant at 16.8 percent. This percentage was almost identical to that found in 2007. SMEs that considered obtaining financing to be of relatively greater concern were generally small, young, innovative, or export and/or growth oriented.

It is also interesting to note that some categories of businesses that were more likely to request financing, i.e., manufacturing businesses, young entrepreneurs, start-ups and innovators, were also more likely to cite access to financing as an obstacle to growth.


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Conclusion

The findings in this report confirm that SMEs have substantial financing needs. Information gathered from almost 10,000 survey respondents showed that 36 percent of SMEs requested external financing in 2011 and received almost $36 billion in capital. Debt represented the main type of financing sought. Businesses with the highest financing request rates were generally businesses with more employees, export-oriented businesses, young entrepreneurs and/or innovative businesses. They were also more inclined to want to grow and had greater intentions to expand sales into new domestic and international markets. Results also show that a company's ability to access financing varied depending upon its age, sector and level of innovative intensity. Companies facing the greatest difficulty accessing financing were start-ups, innovators and those in the accommodation and food services sector. Data revealed that businesses with less collateral available to pledge as security and businesses operating in sectors with relatively higher loan delinquency rates also faced greater difficulty accessing financing.

The survey's detailed findings point toward the opportunity for more in-depth study. Research projects will continue to be developed based on the survey data to further improve the government's understanding of SME financing issues and to support policy development.


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Annex: Survey Data

Table 1: External Financing Request Rates and Reasons for Not Seeking External Financing
Requested external financing in 2011 Did not request external financing in 2011 Reason for not requesting external financing in 2011
Financing not needed Thought request would be turned down Applying for financing too difficult or time consuming Cost of financing too high Other
Percentage
Note: "X" indicates estimates were suppressed to meet confidentiality requirements of the Statistics Act or due to poor quality.
All SMEs 1–499 employees 36.0 64.0 88.0 2.9 2.4 1.1 5.6
Employment Size (number of employees) 1–4 28.8 71.2 87.7 3.4 2.4 1.0 5.5
5–19 41.7 58.3 87.7 2.3 2.6 1.4 6.1
20–99 51.1 48.9 91.1 X X X 5.2
100–499 60.7 39.3 95.0 X X X 1.7
Region Atlantic 35.5 64.5 86.9 2.8 4.8 1.3 4.3
Quebec 36.1 63.9 88.9 3.2 2.0 1.3 4.6
Ontario 35.0 65.0 88.9 3.0 2.3 1.1 4.7
Prairies 40.3 59.7 88.9 2.7 1.9 1.1 5.4
British Columbia and Territories 33.3 66.7 84.9 2.3 2.4 1.0 9.4
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 51.6 48.4 89.8 2.4 X X 5.9
Construction (NAICS 23) 41.3 58.7 90.0 2.3 X X 5.4
Manufacturing (NAICS 31-33) 45.1 54.9 86.7 3.4 1.7 1.9 6.3
Wholesale Trade (NAICS 41) 40.7 59.3 87.6 2.3 2.6 1.3 6.3
Retail Trade (NAICS 44-45) 33.6 66.4 85.7 4.2 3.3 1.6 5.3
Transportation and Warehousing (NAICS 48-49) 43.9 56.1 88.6 5.1 1.7 1.5 3.2
Professional, Scientific and Technical Services (NAICS 54) 28.6 71.4 92.1 1.3 X X 3.8
Accommodation and Food Services (NAICS 72) 34.4 65.6 79.6 4.1 X X 11.9
Other Services (NAICS 81) 31.6 68.4 84.0 4.6 4.8 1.3 5.2
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 28.2 71.8 90.8 1.7 1.9 0.9 4.7
Knowledge-Based Industries (KBI) 36.3 63.7 90.2 X X X 3.9
Location Rural 38.5 61.5 86.9 3.5 2.6 1.5 5.6
Urban 35.4 64.6 88.3 2.7 2.3 1.1 5.6
Export Status Exporter 44.3 55.7 89.6 3.6 1.7 1.7 3.4
Non-exporter 35.1 64.9 87.9 2.8 2.4 1.1 5.9
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 39.0 61.0 83.8 6.6 X X 6.8
2002–2009 (2–10 years old) 37.1 62.9 84.1 4.8 2.4 1.6 7.1
1992–2001 (11+ years old) 37.9 62.1 87.3 3.0 X X 5.3
Prior to 1992 (more than 20 years) 34.0 66.0 91.1 1.2 1.8 1.0 4.8
Innovation Activities Developed or Introduced New or significantly improved good or service 44.6 55.4 86.8 3.0 3.2 1.8 5.2
New or significantly improved process or method 46.1 53.9 86.2 3.3 3.5 0.7 6.3
New organizational method in firm's business practices, workplace organization or external relations 45.2 54.8 84.2 4.0 3.8 1.4 6.5
New way of selling goods or services 46.5 53.5 84.7 3.7 2.6 1.3 7.7
At least one of the four above innovations 43.6 56.4 86.8 3.1 2.7 1.4 6.0
Non-Innovator (none of the above) 32.0 68.0 88.7 2.8 2.0 1.1 5.4
Owner's Age (years) <30 43.5 56.5 85.2 X 0.0 X X
30–39 43.6 56.4 87.6 2.9 2.4 X X
40–49 39.2 60.8 87.3 3.2 3.6 1.1 4.8
50–64 34.4 65.6 88.7 2.9 1.8 1.2 5.4
65+ 26.8 73.2 87.7 X 2.1 X 7.4
Female Ownership (%) 0 36.0 64.0 88.5 2.7 2.0 0.8 6.1
1–49 43.8 56.2 91.6 X X X X
50 36.6 63.4 87.9 4.0 2.6 1.3 4.3
51–99 34.2 65.8 91.1 X X X X
100 28.5 71.5 83.3 4.2 3.9 0.8 7.9
Highest Level of Education Attained by Owner Less than high school 40.4 59.6 88.0 3.2 2.0 1.2 5.6
High school 34.3 65.7 84.9 3.7 3.5 1.2 6.7
College/Cegep/trade school 38.9 61.1 88.6 3.1 2.3 1.2 4.8
Bachelor's degree 37.0 63.0 87.9 2.5 1.5 1.2 6.9
Master's degree or above 27.2 72.8 92.1 1.3 2.0 0.8 3.7

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Table 2: Debt Financing
Requested debt financing in 2011 Overall approval rate (full or partial) Total amount authorized-to-requested
Percentage
Note: "X" indicates estimates were suppressed to meet confidentiality requirements of the Statistics Act or due to poor quality.
All SMEs 1–499 employees 25.5 89.9 94.0
Employment Size (number of employees) 1–4 19.9 88.4 90.4
5–19 29.9 88.5 88.6
20–99 36.9 97.1 97.2
100–499 47.6 97.7 99.0
Region Atlantic 24.2 88.8 94.5
Quebec 29.3 89.1 94.2
Ontario 23.3 85.9 91.7
Prairies 28.3 94.4 97.2
British Columbia and Territories 22.8 93.6 93.9
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 40.9 96.7 95.2
Construction (NAICS 23) 28.8 89.5 93.9
Manufacturing (NAICS 31-33) 33.0 93.7 96.6
Wholesale Trade (NAICS 41) 26.6 92.3 94.1
Retail Trade (NAICS 44-45) 23.1 91.0 97.5
Transportation and Warehousing (NAICS 48-49) 31.7 88.5 93.2
Professional, Scientific and Technical Services (NAICS 54) 21.0 87.0 86.7
Accommodation and Food Services (NAICS 72) 24.6 85.5 83.0
Other Services (NAICS 81) 20.6 90.5 94.1
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 19.7 86.2 93.1
Knowledge-Based Industries (KBI) 26.6 X 90.1
Location Rural 28.7 92.2 94.1
Urban 24.7 89.2 94.0
Export Status Exporter 29.2 93.0 95.6
Non-exporter 25.1 89.5 93.6
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 27.5 75.8 81.0
2002–2009 (2–10 years old) 27.1 85.1 86.3
1992–2001 (11+ years old) 25.5 92.6 94.1
Prior to 1992 (more than 20 years) 24.4 93.5 96.6
Innovation Activities Developed or Introduced New or significantly improved good or service 31.9 85.8 89.6
New or significantly improved process or method 32.7 92.1 95.1
New organizational method in firm's business practices, workplace organization or external relations 32.3 85.4 92.8
New way of selling goods or services 31.1 87.6 92.3
At least one of the four above innovations 30.8 89.3 92.2
Non-Innovator (none of the above) 22.8 90.6 93.5
Owner's Age (years) <30 35.5 X 93.3
30–39 32.0 89.4 94.0
40–49 28.4 88.6 94.7
50–64 23.9 90.2 93.7
65+ 17.9 96.3 93.6
Female Ownership (%) 0 25.2 90.0 95.4
1–49 32.2 95.7 94.7
50 26.6 92.6 94.5
51–99 25.2 X 89.3
100 19.1 77.4 80.5
Highest Level of Education Attained by Owner Less than high school 30.8 89.5 93.0
High school 24.6 89.3 94.2
College/Cegep/trade school 26.6 89.7 90.3
Bachelor's degree 26.1 91.2 96.6
Master's degree or above 19.8 89.9 94.7

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Table 3: Lease Financing
Requested lease financing in 2011 Overall approval rate (full or partial) Total amount authorized-to-requested
Percentage
Note: "X" indicates estimates were suppressed to meet confidentiality requirements of the Statistics Act or due to poor quality.
All SMEs 1–499 employees 6.9 97.4 96.2
Employment Size (number of employees) 1–4 4.3 98.3 98.4
5–19 8.4 95.7 93.0
20–99 13.7 X 98.0
100–499 17.1 X 97.6
Region Atlantic 5.2 X 99.9
Quebec 4.1 91.1 87.1
Ontario 6.8 97.0 95.7
Prairies 9.3 X 98.6
British Columbia and Territories 8.2 X 97.9
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 6.6 97.8 98.3
Construction (NAICS 23) 7.4 X 98.2
Manufacturing (NAICS 31-33) 7.7 90.6 82.8
Wholesale Trade (NAICS 41) 9.9 X 87.9
Retail Trade (NAICS 44-45) 5.7 X 99.9
Transportation and Warehousing (NAICS 48-49) 12.7 99.2 96.8
Professional, Scientific and Technical Services (NAICS 54) 6.5 X 97.3
Accommodation and Food Services (NAICS 72) 4.7 X 99.9
Other Services (NAICS 81) 4.7 X 97.9
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 6.6 X 99.4
Knowledge-Based Industries (KBI) 6.7 X 75.2
Location Rural 5.5 99.7 97.2
Urban 7.2 97.0 96.0
Export Status Exporter 10.1 95.7 95.2
Non-exporter 6.5 97.8 96.5
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 7.6 X 75.7
2002–2009 (2–10 years old) 6.9 97.6 97.7
1992–2001 (11+ years old) 9.0 X 93.9
Prior to 1992 (more than 20 years) 5.6 98.4 98.7
Innovation Activities Developed or Introduced New or significantly improved good or service 8.2 94.7 91.5
New or significantly improved process or method 8.8 96.4 95.9
New organizational method in firm's business practices, workplace organization or external relations 9.9 97.4 97.2
New way of selling goods or services 9.7 97.2 96.4
At least one of the four above innovations 8.5 96.4 94.4
Non-Innovator (none of the above) 6.1 98.1 97.7
Owner's Age (years) <30 5.8 100.0 100.0
30–39 9.3 97.0 87.7
40–49 7.6 95.9 95.5
50–64 6.4 98.1 98.4
65+ 4.8 X 97.7
Female Ownership (%) 0 6.9 98.1 97.0
1–49 8.6 X 97.8
50 7.2 X 95.7
51–99 7.3 80.9 72.1
100 4.5 X 99.9
Highest Level of Education Attained by Owner Less than high school 8.2 X 93.3
High school 6.5 X 99.2
College/Cegep/trade school 6.9 99.2 98.4
Bachelor's degree 6.9 95.2 95.9
Master's degree or above 6.3 X 87.9

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Table 4: Trade, Equity and Government Financing
Requested trade credit financing in 2011 Requested equity financing in 2011 Requested government financing in 2011
Percentage
All SMEs 1–499 employees 8.1 2.3 3.7
Employment Size (number of employees) 1–4 5.5 1.2 2.3
5–19 9.6 3.4 4.6
20–99 15.0 4.2 6.9
100–499 19.1 3.6 8.4
Region Atlantic 11.2 1.7 4.9
Quebec 2.0 1.5 6.4
Ontario 10.4 2.9 3.5
Prairies 9.5 2.5 2.6
British Columbia and Territories 8.1 2.2 1.4
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 5.8 1.7 11.4
Construction (NAICS 23) 12.8 2.7 2.1
Manufacturing (NAICS 31-33) 13.7 3.4 8.0
Wholesale Trade (NAICS 41) 14.0 2.9 2.4
Retail Trade (NAICS 44-45) 8.4 1.9 2.3
Transportation and Warehousing (NAICS 48-49) 8.4 2.1 2.9
Professional, Scientific and Technical Services (NAICS 54) 3.8 1.9 4.3
Accommodation and Food Services (NAICS 72) 6.0 3.3 3.4
Other Services (NAICS 81) 7.5 2.2 2.7
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 4.7 1.8 2.4
Knowledge-Based Industries (KBI) 5.1 3.3 8.7
Location Rural 7.4 1.5 5.0
Urban 8.3 2.5 3.3
Export Status Exporter 11.5 4.1 9.7
Non-exporter 7.7 2.1 3.0
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 6.3 4.6 6.9
2002–2009 (2–10 years old) 7.9 3.4 3.3
1992–2001 (11+ years old) 8.6 1.9 3.1
Prior to 1992 (more than 20 years) 8.1 1.6 3.9
Innovation Activities Developed or Introduced New or significantly improved good or service 10.6 4.6 6.3
New or significantly improved process or method 13.8 2.8 6.9
New organizational method in firm's business practices, workplace organization or external relations 12.3 3.7 5.5
New way of selling goods or services 13.4 3.0 5.6
At least one of the four above innovations 10.9 3.4 5.2
Non-Innovator (none of the above) 6.7 1.6 2.8
Owner's Age (years) <30 3.4 2.0 6.6
30–39 9.8 2.4 4.3
40–49 8.3 2.7 3.6
50–64 8.2 2.1 3.8
65+ 6.0 2.1 2.4
Female Ownership (%) 0 8.2 2.2 3.7
1–49 10.4 2.8 5.2
50 8.1 2.1 3.3
51–99 6.3 2.2 4.8
100 6.0 2.8 2.3
Highest Level of Education Attained by Owner Less than high school 7.0 2.8 4.3
High school 7.3 1.1 2.9
College/Cegep/trade school 9.9 2.4 3.3
Bachelor's degree 8.7 3.0 5.2
Master's degree or above 5.0 2.6 2.9

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Table 5: External Obstacles to Business Growth
Shortage of labour Fluctuations in demand for products or services Obtaining financing Government regulations Rising cost of inputs Increasing competition Other
Percentage
All SMEs 1–499 employees 33.1 52.2 16.8 33.5 63.2 47.9 22.2
Employment Size (number of employees) 1–4 25.9 53.7 15.6 30.3 60.8 44.6 20.5
5–19 40.7 49.9 18.8 36.1 65.3 50.8 24.0
20–99 42.1 53.1 16.5 40.5 69.4 53.7 23.7
100–499 45.6 42.0 12.9 36.9 55.9 56.2 24.6
Region Atlantic 27.6 54.8 18.2 40.2 82.0 37.5 24.5
Quebec 35.0 35.9 17.6 33.1 48.3 45.4 21.1
Ontario 27.9 57.5 17.7 33.9 67.6 52.8 24.4
Prairies 43.9 49.9 13.3 26.9 62.7 46.4 17.1
British Columbia and Territories 31.0 63.1 17.4 37.9 65.9 46.9 23.9
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 34.5 51.2 15.3 52.1 77.2 38.8 25.9
Construction (NAICS 23) 38.3 57.9 14.5 34.7 62.3 48.3 19.1
Manufacturing (NAICS 31-33) 37.2 62.8 22.6 32.9 64.9 45.3 24.9
Wholesale Trade (NAICS 41) 25.2 61.6 15.3 27.9 66.6 59.6 27.0
Retail Trade (NAICS 44-45) 29.0 45.4 13.4 31.5 64.3 52.2 22.5
Transportation and Warehousing (NAICS 48-49) 39.3 52.2 14.7 43.5 81.1 49.2 20.5
Professional, Scientific and Technical Services (NAICS 54) 30.6 53.2 14.3 22.5 41.5 44.9 21.9
Accommodation and Food Services (NAICS 72) 47.2 40.6 23.3 43.7 86.0 53.3 25.4
Other Services (NAICS 81) 37.5 45.7 19.5 31.5 62.5 35.7 22.1
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 23.9 53.4 17.8 29.4 54.9 48.5 19.6
Knowledge-Based Industries (KBI) 29.6 55.1 19.0 17.0 41.7 47.6 22.3
Location Rural 36.8 48.4 16.4 39.2 69.9 40.5 20.9
Urban 32.1 53.2 16.9 32.0 61.5 49.8 22.5
Export Status Exporter 33.1 62.8 20.3 33.2 59.1 51.8 30.4
Non-exporter 33.1 50.9 16.4 33.5 63.7 47.4 21.2
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 34.9 51.3 25.8 30.6 67.9 43.0 23.5
2002–2009 (2–10 years old) 32.6 54.6 21.8 30.6 62.3 46.2 21.4
1992–2001 (11+ years old) 32.3 51.5 18.1 36.5 61.1 48.9 22.4
Prior to 1992 (more than 20 years) 33.6 51.2 11.9 33.8 64.5 48.9 22.3
Innovation Activities Developed or Introduced New or significantly improved good or service 33.3 56.7 22.0 35.5 66.8 51.5 29.0
New or significantly improved process or method 42.9 53.9 21.0 36.9 69.2 48.9 30.6
New organizational method in firm's business practices, workplace organization or external relations 39.0 50.0 25.4 41.2 64.9 52.5 30.5
New way of selling goods or services 35.3 61.2 25.1 38.2 68.1 55.6 34.4
At least one of the four above innovations 35.6 56.2 20.6 35.9 66.4 52.0 29.2
Non-Innovator (none of the above) 30.9 50.4 14.1 31.4 60.5 44.2 18.1
Owner's Age (years) <30 33.8 52.2 31.3 23.4 57.4 46.2 12.9
30–39 39.4 51.5 27.9 36.1 64.6 48.4 17.5
40–49 35.9 51.6 18.1 31.0 68.0 55.0 23.2
50–64 31.6 53.9 13.8 35.6 62.3 45.4 23.6
65+ 26.6 47.1 13.6 29.3 55.0 40.7 18.9
Female Ownership (%) 0 33.2 52.2 17.4 34.1 61.9 48.3 21.9
1–49 34.0 53.6 12.2 35.1 63.0 51.2 21.8
50 32.8 54.8 17.5 34.8 66.4 45.7 23.1
51–99 32.6 54.3 12.4 24.6 75.6 39.2 28.1
100 32.4 47.0 18.2 28.9 62.9 47.2 21.5
Highest Level of Education Attained by Owner Less than high school 36.0 44.2 19.1 35.0 65.2 43.2 19.8
High school 34.0 51.6 16.7 33.7 67.7 48.9 19.3
College/Cegep/trade school 37.2 54.5 16.9 37.6 67.1 48.1 23.6
Bachelor's degree 32.0 54.2 19.2 30.9 58.0 50.8 25.1
Master's degree or above 20.7 49.9 10.7 25.9 52.7 43.9 20.7

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Table 6: Internal Obstacles to Business Growth
Managing debt level Maintaining sufficient cash flow Lack of monitoring business operations to make improvements Lack of knowledge about competitors or market trends Devoting too much time to day-to-day operations Recruiting and retaining employees Other
Percentage
All SMEs 1–499 employees 18.3 37.2 16.3 13.3 38.4 39.0 9.4
Employment Size (number of employees) 1–4 16.7 35.3 13.5 12.8 35.7 29.7 8.8
5–19 21.2 40.1 20.0 13.2 40.9 47.3 10.3
20–99 16.4 38.2 18.5 16.0 44.2 55.7 9.1
100–499 14.8 26.9 14.3 10.3 30.8 57.2 11.4
Region Atlantic 20.2 41.8 14.0 11.2 35.3 33.3 7.6
Quebec 10.4 31.8 13.6 15.9 30.3 35.8 9.3
Ontario 23.9 41.7 16.1 12.4 40.2 37.1 9.3
Prairies 17.1 32.4 18.0 12.3 40.9 46.2 9.5
British Columbia and Territories 17.0 38.7 19.0 13.7 43.2 40.6 10.4
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 20.6 36.7 14.9 16.4 34.7 33.9 7.9
Construction (NAICS 23) 15.3 40.8 16.5 12.4 36.6 43.1 9.8
Manufacturing (NAICS 31-33) 19.8 42.1 21.1 17.4 46.1 38.3 9.5
Wholesale Trade (NAICS 41) 17.6 34.1 19.3 14.2 37.4 35.4 9.7
Retail Trade (NAICS 44-45) 21.0 38.2 17.8 12.5 37.4 37.5 7.3
Transportation and Warehousing (NAICS 48-49) 16.9 39.7 14.9 10.5 41.0 40.6 5.9
Professional, Scientific and Technical Services (NAICS 54) 11.4 34.6 16.7 13.7 42.6 33.7 7.8
Accommodation and Food Services (NAICS 72) 30.0 39.4 19.3 15.6 48.6 58.3 9.5
Other Services (NAICS 81) 16.9 38.9 16.4 11.6 41.8 42.2 9.7
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 17.1 32.3 11.5 11.5 30.0 32.2 12.7
Knowledge-Based Industries (KBI) 9.7 39.9 14.2 19.4 38.1 31.0 7.6
Location Rural 20.1 37.8 15.8 14.0 37.7 39.6 8.1
Urban 17.8 37.1 16.5 13.1 38.6 38.8 9.7
Export Status Exporter 20.6 41.0 19.7 17.8 43.6 38.7 9.5
Non-exporter 18.0 36.8 15.9 12.7 37.8 39.0 9.4
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 19.1 41.1 13.2 15.3 34.2 45.7 5.5
2002–2009 (2–10 years old) 20.0 40.3 17.4 10.2 41.1 40.7 9.4
1992–2001 (11+ years old) 18.6 37.5 16.2 15.2 38.2 35.4 11.4
Prior to 1992 (more than 20 years) 16.9 34.7 16.1 13.8 37.4 39.2 8.7
Innovation Activities Developed or Introduced New or significantly improved good or service 22.4 44.4 21.3 15.0 49.5 40.9 13.5
New or significantly improved process or method 21.9 45.5 22.2 18.9 48.8 46.7 15.4
New organizational method in firm's business practices, workplace organization or external relations 23.5 44.4 23.7 15.6 46.3 44.9 12.8
New way of selling goods or services 22.3 46.1 24.8 17.4 49.9 43.7 12.1
At least one of the four above innovations 20.8 43.5 21.3 15.1 46.7 43.0 12.1
Non-Innovator (none of the above) 16.4 33.2 13.0 12.3 32.7 34.9 7.7
Owner's Age (years) <30 27.6 45.7 24.0 17.4 34.3 36.8 7.1
30–39 19.3 40.5 19.2 16.3 45.2 49.8 5.6
40–49 19.9 41.6 20.3 14.7 40.1 42.2 12.0
50–64 17.1 35.5 13.6 12.6 37.6 36.9 8.9
65+ 17.0 29.4 14.0 9.0 32.1 29.8 8.8
Female Ownership (%) 0 16.1 36.3 16.8 14.6 38.7 40.1 9.1
1–49 15.7 35.7 17.8 11.9 35.5 37.4 8.3
50 21.8 39.2 15.3 13.4 41.0 38.0 8.9
51–99 24.0 39.2 10.9 6.4 32.6 32.1 3.8
100 23.6 39.2 15.1 10.1 37.4 38.1 13.2
Highest Level of Education Attained by Owner Less than high school 22.2 39.0 14.0 11.8 32.8 37.5 6.0
High school 19.0 35.6 16.6 15.9 34.8 38.3 9.3
College/Cegep/trade school 18.9 41.2 17.1 12.9 43.8 42.6 10.1
Bachelor's degree 18.0 37.0 17.4 14.6 41.5 41.3 10.4
Master's degree or above 12.6 29.3 13.8 7.9 30.6 28.3 8.6

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Table 7: Distribution of SMEs
Percentage
All SMEs 1–499 employees 100.0
Employment Size (number of employees) 1–4 53.0
5–19 35.5
20–99 10.5
100–499 1.0
Region Atlantic 7.0
Quebec 21.2
Ontario 34.6
Prairies 19.8
British Columbia and Territories 17.4
Industry Agriculture, Forestry, Fishing and Hunting (NAICS 11), Mining and Oil and Gas Extraction (NAICS 21) 6.7
Construction (NAICS 23) 15.2
Manufacturing (NAICS 31-33) 6.7
Wholesale Trade (NAICS 41) 6.2
Retail Trade (NAICS 44-45) 13.7
Transportation and Warehousing (NAICS 48-49) 5.0
Professional, Scientific and Technical Services (NAICS 54) 11.7
Accommodation and Food Services (NAICS 72) 8.8
Other Services (NAICS 81) 7.5
Health Care and Social Assistance (NAICS 62), Information and Cultural Industries (NAICS 51), Arts, Entertainment and Recreation (NAICS 71) 18.6
Knowledge-Based Industries (KBI) 4.6
Location Rural 21.0
Urban 79.0
Export Status Exporter 10.4
Non-exporter 89.6
Age of Business (year started / number of years old) 2010–2011 (2 years or younger) 4.9
2002–2009 (2–10 years old) 27.0
1992–2001 (11+ years old) 24.3
Prior to 1992 (more than 20 years) 43.7
Innovation Activities Developed or Introduced New or significantly improved good or service 23.7
New or significantly improved process or method 14.5
New organizational method in firm's business practices, workplace organization or external relations 14.9
New way of selling goods or services 16.6
At least one of the four above innovations 37.8
Non-Innovator (none of the above) 62.2
Owner's Age (years) <30 1.6
30–39 10.6
40–49 28.2
50–64 48.4
65+ 11.3
Female Ownership (%) 0 53.9
1–49 12.5
50 18.1
51–99 2.1
100 13.4
Highest Level of Education Attained by Owner Less than high school 9.5
High school 23.8
College/Cegep/trade school 32.1
Bachelor's degree 21.8
Master's degree or above 12.8

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