Financial institutions are turning their heads towards small business financing, according to Dan Kelly, President and CEO of the Canadian Federation of Independent Business.
What this means, however, isn’t an increase in financing, but more attention paid to these small businesses, he said.
According to the survey that CFIB puts out on a monthly basis – Business Barometer – around 25 per cent of their clients are consistently challenged with finding financing.
The survey, which came out Jan. 2, also said that 55 per cent of CFIB’s members are receiving all of the funding they need, and 23 per cent are receiving most.
“It does seem that in terms of small business’s ability to get a loan or to hang onto the financing that they need to put their products and services to market, that it’s not getting better, but it’s also not getting worse,” said Kelly.
The challenges lie in a more modest economic outlook from the recent recession, he added. There is a lack of consumer demand, businesses are not expanding and growing as rapidly, and there hasn’t been as great a demand for financing as there has been in the past.
“That’s helped in terms of tempering the concern over the availability of financing for small firms,” said Kelly who notes that banks have recognized the profitability of small businesses as customers in the wake of a cooling real estate market and reduced opportunities for lending to big businesses.
Craig Alexander, Senior Vice President and Chief Economist with TD Bank Financial Group, said that Canada should expect moderate economic growth this year after a deceleration in 2012.
The average rate of economic growth will be close to 2 per cent, in line with the long time historical average for the economy. This moderate economic growth means rising demand in goods and services that small businesses provide, said Alexander.
With less individual consumer investing in the real estate market, financial institutions will turn to investments in small and medium businesses in the coming year, he said.
“We’ve been seeing business credit rising in recent quarters. Credit is flowing in the Canadian economy and access to financing has been available,” he said, adding that small business owners shouldn’t expect any accelerated lending or loosening of lending regulations.
“I think at the end of the day, we’re going to see healthy business lending to small- and medium-sized businesses.”