Fast facts

• Banks in Canada have more than two million relationships with small- and medium-sized business owners operating in communities across the country, providing financing, deposit services and a range of innovative business solutions
• 78 per cent of SMEs have a positive relationship with their main financial institution
• Of the 77 per cent of SME owners who have a credit relationship with a bank, 90 per cent report it to be positive
• As of December 2010, Canada's domestic banks authorized almost $87.5 billion in credit to SMEs across the country

The bottom line

Banks play an essential role in the business operations of small- and medium-sized businesses, meeting their diverse financial needs to drive innovation, development and growth.

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The federal government has declared 2011 as the Year of the Entrepreneur, as a way to highlight the essential role that small and medium-sized enterprises (SMEs) will play in securing Canada's ongoing economic recovery. The majority of bank business customers are small businesses and banks work hard to meet the needs of this market – one that is increasingly competitive, diverse and technologically savvy. In fact, all banks have dedicated small business departments to help their SME customers.

More than just lending

Bankers in communities across the country have more than two million relationships with SME owners. SMEs are demanding value and quality service. To meet this demand, banks provide a variety of products and services in addition to lending such as deposit and transaction accounts, payments facilitation, day-to-day cash management services, foreign exchange, records management, international trade advice and business succession planning.

SMEs and bank relationships

The relationship is what matters and when we asked SME owners about their relationship with their bank, we found that:

• 78 per cent of SMEs owners say they have a positive relationship with their main financial institution.
• Small business owners tend to be loyal: half of survey respondents have had a business relationship with their main financial institution for more than 10 years and, of those, 22 per cent have for more than 20 years.
• SME owners identified the most important factors in their relations with their bank as: having a face-to face relationship (92 per cent), providing low priced products and services (91 per cent) and providing access to credit (85 per cent).
• When asked about the biggest economic challenges facing their businesses, 15 per cent of SMEs said declining sales or revenues, 11 per cent cited attracting and maintaining customers and nine per cent said increased operating costs.

SMEs and credit

Canadian SMEs seeking credit enjoy a very competitive marketplace, with many different financing firms competing for their business. Throughout the recent economic downturn and into the recovery period banks have continued to lend to credit worthy businesses, providing a range of credit products including loans and lines of credit.

• As of December 2010, Canada's domestic banks authorized almost $87.5 billion in credit to SMEs across the country.
• Of the 77 per cent of SME owners who have a credit relationship with a bank, 90 per cent describe their credit relationship as “good” and almost six-in-ten (58 per cent) describe it as “very good”.
• Banks continue to provide credit through the economic downturn: only seven per cent of SME owners cite access to credit as their biggest economic challenge.
• 43 per cent of SMEs have had a credit relationship with their main financial institution for more than a decade, with 21 per cent reporting a relationship of over 20 years.
• 70 per cent have credit relationships with two or more suppliers, which may include credit card suppliers, finance companies, leasing companies, banks, credit unions, angel investors or other credit suppliers:
  • 20 per cent have only one credit relationship
  • 17 per cent have two credit relationships
  • 33 per cent have five credit relationships or more

Banks are also offering more flexible products and simplifying the credit application process, especially for smaller amounts of credit.

SME banking needs

SMEs turn to banks for a variety of business solutions beyond financing. From deposit services and cash management to foreign exchange and succession planning, banks work day in and day out to provide advice and develop innovative solutions for their SME clients.

• When choosing a financial institution, 35 per cent based their choice on credit services and 52 per cent chose their institution for non-credit banking services.
• In-person, branch service with a teller is the most frequent way SMEs do their day-to-day banking (79 per cent), followed by Internet banking at 66 per cent, an increase of 12 per cent from 2008.
• 53 per cent of SME owners who bank online have increased their use of Internet banking and 79 per cent of business owners say Internet banking has made their business more efficient.
• 91 per cent of SME owners think provision of low cost products and services is important, while 92 per cent think a face-to-face relationship is important to them.
• 81 per cent of SME owners believe it is important that their financial institutions are technologically advanced.

SME use of banking services

The top three services SMEs use with their main financial institution are:

• Deposit services (82 per cent)
• Transaction accounts (59 per cent)
• Payments facilitation (51 per cent)

Strong ties to agriculture

Banks in Canada also have a longstanding business relationship with farmers and agricultural customers and these strong relationships have helped banks work with their customers through significant challenges. In the past decade alone, farmers have had to confront BSE, avian influenza, drought, floods, the H1N1 virus and country of origin labelling (COOL). Banks have been there for their clients, working with them on an individual, case-by-case basis to assess their unique needs and to develop solutions.

General inquiries
1-800-263-0231 or inform@cba.ca

Media inquiries
Rachel Swiednicki, Manager, Media Relations
(416) 362-6093, ext. 220 rswiednicki@cba.ca

 

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All polling data from: SME Survey Results: Assessments of Relationship with Fis, Strategic Counsel, August 2009.