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Thursday, March 23, 2006

Survey on Financing of Small- and Medium-sized Enterprises

2004 Previous release

The bigger the enterprise is in terms of employees, the higher its average outstanding debt, according to results from the Survey on Financing of Small- and Medium-sized Enterprises.

Businesses with 1 to 4 employees had average debt of $187,000 in 2004. Those with 5 to 19 employees carried an average of $489,000 in debt, while the average among businesses with 20 to 99 employees was $2.2 million.

In total, small- and medium-sized enterprises had $377 billion in total debt outstanding in 2004, up 4.7% compared with $360 billion four years earlier.

On the other hand, the average for all enterprises declined 5.1% from $293,000 in 2000 to $278,000 in 2004. This is because the number of enterprises rose faster than total debt during the four-year period.

Total debt is comprised of all liabilities on business' balance sheets. It includes loans and mortgages from banks and other financial institutions, credit card balances, lease obligations, credit obtained from crown corporations, short-term trade credit owed to suppliers and loans from private individuals.

The survey, conducted in the fall and winter of 2004, covered about 3,500 responding firms with fewer than 500 employees and less than $50 million in revenue. Survey results cover seven industry groupings, five employment sizes, six geographic regions and start-ups as opposed to established firms.

On a sectoral basis, average debt rose slightly between 2000 and 2004 among businesses in three key sectors: wholesale and retail trade; tourism; and agricultural and primary industries.

However, average outstanding debt among businesses in the manufacturing sector declined by about one-quarter to $390,000. At the same time, their total debt fell 15% to about $29 billion.

This result is consistent with independent findings for larger incorporated enterprises as reported by Statistics Canada's quarterly financial statistics for enterprises. Those data show borrowings rose 6.0% from 2001 to 2004 among non-financial industries. However, they declined 4.3% in the manufacturing sector.

Small- and medium-sized businesses cited "personal savings" and "retained earnings" as the most important sources of financing continuing operations. Others were lines of credit, trade credit of suppliers, commercial loans and personal credit cards. These were also the sources most frequently cited in 2000.

Note: The Survey on Financing of Small- and Medium-sized Enterprises 2004 was conducted in partnership with Industry Canada and Finance Canada as part of a data collection program on small- and medium-sized businesses. The first results of the survey, which covered topics such as requests for loans, approval of loan applications and measures of firm satisfaction with their credit suppliers, were released in The Daily on February 21, 2006. Today's release publishes an additional set of data tables that show the financing structure, as well as measures of profitability, of small and medium enterprises using balance sheet and income statement information.

Total and average liabilities outstanding
  2000 2004
  Total Average Total Average
   $ billions  $ $ billions  $
All small and medium sized enterprises 360 293,000 377 278,000
Selected employee size groups        
1 to 4 75 155,000 82 187,000
5 to 19 101 481,000 89 489,000
20 to 99 71 1,564,000 77 2,212,000
Selected industries        
Agriculture/primary 55 325,000 60 346,000
Manufacturing 34 528,000 29 390,000
Wholesale/retail trade 69 342,000 73 344,000
Tourism 24 290,000 32 298,000

Definitions, data sources and methods: survey number 2941.

For more information, or data sets, or to enquire about the concepts, methods or data quality of this release, contact Klaus Kostenbauer (613-951-2904; 1-877-679-2746), Small Business and Special Surveys Division.

For additional information on related research topics and data sets, consult Industry Canada's Web site.

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Date Modified: 2006-03-23 Important Notices