Relationships are important in banking, and perhaps never more so than when working with small and medium-sized enterprises (SMEs). Banks play an essential role for SMEs across Canada, meeting their diverse financial needs to drive jobs, innovation, development and growth.

What You Need to Know:

  • The majority of bank business customers are small and medium-sized enterprises (SMEs), and banks have financing relationships with more than 1 million SMEs across Canada.
  • As of December 2017, Canada's domestic banks authorized more than $225 billion in credit to SMEs across the country. Authorized lending to SMEs has increased by 22 per cent since the end of 2012.
  • Banks provide SMEs with more than just financing. They also offer a wide range of financial and advisory solutions.
  • Banks participate in the federal government’s Canada Small Business Financing Program (CSBFP).

What are Small and Medium-Sized Businesses?

Canadian Bankers Association Business Credit Statistics define an SME as having authorized borrowing of under $5 million.

Serving the Banking Needs of SMEs

SMEs can turn to banks for a variety of financial and advisory solutions, including – but not limited to – financing. These banking solutions include:

  • business chequing and savings accounts, in both Canadian and foreign dollar denominations
  • tax payment services
  • foreign exchange services
  • succession and investment planning
  • electronic funds transfers
  • online and telephone banking
  • payroll and filing services
  • coaching podcasts, booklets and seminars

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Lending to SMEs

Banks work closely with entrepreneurs to provide a range of long-term financing and short-term, day-to-day lending options:

  • term loans
  • mortgages
  • leasing
  • lines of credit
  • overdraft
  • credit cards

Loan approval rates are high. According to Statistics Canada’s Survey on Financing and Growth of Small and Medium Enterprises – 87 per cent of SMEs in Canada that applied for a loan from a financial institution were approved.1

Supporting Women Entrepreneurs

Banks have taken initiatives to assist women entrepreneurs to build and grow their businesses - from financing and other banking products and services to capacity building and networking programs. Statistics Canada’s 2014 survey on Financing and Growth of SMEs provides insight on the financing of women entrepreneurs. According to this study:

  • Canada’s domestic banks are the main provider of external finance for 74 per cent for businesses with a majority female ownership.
  • For businesses fully owned by women, 81 per cent were approved for debt financing, and those with majority female ownership the approval rate was 87 per cent.
  • Debt financing is not an obstacle for women entrepreneurs – only 10 per cent of female-owned SMEs cited obtaining financing as a major obstacle to external obstacle to growth.

Canadian banks are active supporters of SMEs across Canada and this support and commitment extends to women entrepreneurs. Beyond the business banking services offered to their clients, banks have programs and services internally to support women entrepreneurs as well as offering support to external organizations.

 

Canada’s Small Business Financing Program (CSBFP)

The banks also participate in the federal government’s Canada Small Business Financing Program. The government shares risk with lenders through this program, which helps stimulate job and wealth creation. Small businesses or start-ups operating for profit in Canada with gross annual revenues of $10 million or less are eligible for CSBFP loans.

Partnering with Export Development Canada (EDC)

Banks work closely with Export Development Canada (EDC) to support those SMEs that directly export their goods and services internationally or participate in global markets. SMEs are able to access EDC’s range of products to grow their businesses.

  1. Stats Canada, Survey on Financing and Growth of Small and Medium Enterprises, 2017, Released 2018.

Questions?

If you have general questions about banking in Canada, call the Canadian Bankers Association’s Banking Information Line at 1‑800‑263‑0231 or send an email to inform@cba.ca.