Canadian Bankers Association

Canadian Bankers Association

October 16, 2009 15:05 ET

Survey Reveals Challenges for Small Businesses During Economic Downturn

TORONTO, ONTARIO--(Marketwire - Oct. 16, 2009) – The current economic downturn has been challenging for small businesses and a recent survey shows how they have coped and what that means for their relationship with their bank. The Strategic Counsel and the Canadian Bankers Association (CBA) recently conducted a survey of small-and medium-sized enterprise (SME) owners across Canada and found that 43 per cent of SMEs reported a significant reduction in business revenue over the last 12 months. However, it is encouraging that 57 per cent did not.

Noteworthy is the fact that the longer the businesses have been operating, the more they reported decreased revenues: 46 per cent of SMEs operating for more than 20 years had reduced revenue compared to only 37 per cent of those operating for 10 years or less.

So how do small businesses cope with tough economic times and decreased revenues? For some it may be cutting back on expenses and operating costs where they can. Some others will seek out additional credit from financial institutions, but they are in the minority. The CBA survey found that 68 per cent of SME owners who have a relationship with a credit provider say they are unlikely to seek additional credit for their business in the next six months while 32 per cent say they will. 

Banks meeting SME credit needs

Banks have been very willing to work with their SME customers through the recent tough economic times to help them meet their credit needs. Only three per cent of respondents reported banks have not been at all willing to help.

"Throughout the past year banks have worked hard to help SME owners navigate a difficult economic environment. They have continued to lend to credit worthy businesses and stepped in to fill gaps left as other lenders reduced credit or left the marketplace all together," said Nancy Hughes Anthony, President and CEO of the Canadian Bankers Association. "The majority of bank business customers are small businesses and banks work in communities across the country to understand the challenges each business faces and find solutions tailored to its needs."

The substantial majority (78 per cent) of survey respondents have a positive relationship with their main financial institution. Furthermore, of the 77 per cent of SME owners who have a credit relationship with a bank, 90 per cent describe it as good or very good.

More than just credit

Banks play an important part in helping SMEs meet the diverse financial needs that drive growth and innovation. SME owners use banks for a wide range of services, not just credit. The top three bank services used by SME owners are deposit services (82 per cent), transaction accounts (59 per cent) and payment facilitation (51 per cent). When asked what were the most important factors in their relationship with their bank, SME owners identified 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).

"SME owners recognize the high level of service banks provide to ensure their needs are consistently met. This is confirmed by the survey results which found that more than half of all respondents had been with their main financial institution for more than 10 years and nearly a quarter (22 per cent) had been with their main financial institution for more than 20 years," said Ms. Hughes Anthony.

Many SMEs now banking online

While in-branch service with a teller continues to be the most frequent way SME owners conduct their day-to-day business banking – 79 per cent of respondents report using this method – the second most frequently used channel is now online banking at 66 per cent, an increase of 12 per in the past year. Furthermore, 79 per cent of business owners who bank online say Internet banking has made their business more efficient by reducing the time needed to do basic banking.

More information on SMEs and the survey can be found on the CBA website or visit www.cba.ca/index.php?option=com_content&view=article&catid=50&id=124&Itemid=56&lang=en.

Survey methodology

The survey was commissioned by the Canadian Bankers Association and conducted by The Strategic Counsel. The findings are based on a random, representative sample of 200 SME business leaders from across Canada. Respondents were interviewed by telephone from August 10 to 25, 2009. A sample of 200 is accurate within +/-6.9 percentage points, 19 times out of 20. 

The Canadian Bankers Association (CBA) works on behalf of 50 domestic chartered banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 263,400 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada's economy. The Association also promotes financial literacy to help Canadians make informed financial decisions. www.cba.ca.

Contact Information

  • Canadian Bankers Association
    Andrew Addison
    (416) 362-6093, ext. 220 or Cell: (416) 587-7733
    aaddison@cba.ca