TORONTO, Nov. 14 /CNW/ - Despite saying it wants to increase service to
small- and mid-size business, Canada's banking sector is making little
progress, the latest research from CFIB shows. Banking Matters reveals
dwindling satisfaction with major financial institutions, with only two
improving their rating since the previous survey in 2003.
"Since the late 1980s fewer and fewer small business owners have applied
for bank financing," CFIB President Catherine Swift explains. Small business
loan activity has remained fairly stable since 1988 while loan activity for
larger businesses has increased significantly. "This trend shows the banks may
be missing opportunities for growth with the small business sector that
accounts for 45 per cent of the Canadian economy," Swift says. "You have to
question whether banks are meeting the borrowing needs of small businesses."
CFIB asked members to rank their financial institution on nine
performance indicators, including lending terms, service charges, access to
full-service branch, online banking and treatment by their account manager.
HSBC, credit unions and ATB Financial (Alberta Treasury Branches)
continue to receive highest marks from their small business clients but their
performance is beginning to falter. The big five banks have not shown much
improvement in service satisfaction, which remains consistently low. Credit is
due to both Desjardins and National Bank for improved satisfaction levels.
Overall, however, the banking sector is not making significant strides towards
better serving the small business sector.
Among the report's findings:
- The overall loan rejection rate is high at almost 14 per cent and the
smaller the business, the more likely it is to be refused a loan. The
corresponding rate for smaller firms (with fewer than five employees)
was close to one in five (19 per cent).
- The smaller the business, the higher the cost of bank financing. On
average, for example, the smallest businesses paid 2.28 percentage
points above the prime rate, while mid-sized firms paid 1.12 points
- Bank market shares for the small business market have changed. The
Royal Bank, CIBC and the Bank of Montreal continue to lose a portion
of the small business market. Those experiencing an upward trend in
small business market share include: TD Canada Trust, Scotiabank,
Desjardins and credit unions.
"Most Canadians work for small- and mid-size business and a strong and
competitive banking sector is essential to the future of the country's
economy," Swift says. "Therefore, small- and mid-sized businesses need access
to competitively priced banking services. This report suggests ways to improve
The full report is available online at www.cfib.ca. The report is based
on survey results from 9,347 owners of small- and mid-sized businesses.
CFIB is Canada's largest association of small- and medium-sized
businesses. Encouraging the development of good public policy at the federal,
provincial and municipal levels, CFIB represents more than 105,000 business
owners, who collectively employ 1.25 million Canadians and account for
$75 billion in GDP.
For further information:
For further information: Judy Langford at (416) 222-8022,