Survey on Financing of Small- and Medium-sized Enterprises

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Small- and medium-sized enterprises applied for $59 billion in loans in 2007, and were approved for about 86%, or $51 billion. This was higher than the approval rate of 80% in both 2000 and 2004.

The larger a firm's employment, the more likely it had requested external financing. About 14% of those with zero employees requested financing, while almost one-half of the largest businesses, those with 100 to 499 employees, did so.

The vast majority (97%) of requests by businesses with 100 to 499 employees were approved. The approval rate for businesses with zero employees was 85%.

As in previous surveys, the loan request rate was higher in capital intensive sectors, such as agriculture, primary industries and manufacturing. It was lower in human capital intensive sectors (knowledge-based industries).

Almost all requests in the primary sector were approved. The lowest approval rate was in accommodation and food services (80%).

As in 2004, one in five businesses cited difficulty in obtaining financing as an obstacle to the growth of the business.

Overall, one-quarter of all business owners reported that they intended to retire from their businesses over the next five years. Of these, one in five intended to keep the business in the family, two in five planned to sell the business to outsiders, and most of the remainder intended to close it.

Half of all businesses reported that they depended on financial institutions to fund the start-up of their businesses, with two out of three saying they depended on loans for their ongoing operations.

Note: The 2007 Survey on Financing of Small- and Medium-sized Enterprises was conducted in partnership with Industry Canada and Finance Canada, as part of a data collection program on small- and medium-sized businesses. The survey covered about 15,000 responding firms operating in 2007 with fewer than 500 employees and less than $50 million in revenue. Results cover seven industry groupings, five employment sizes, six geographic regions and start-ups compared with established firms. This was the third benchmark survey. Data are available for 2004 and 2000, as well as for a smaller sample in 2001.

Definitions, data sources and methods: survey number 2941.

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

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