Despite optimistic outlook, credit still hard for small companies to
TORONTO, April 11 /CNW/ - Getting credit is still no easy feat for small
companies post-downturn despite improved lending conditions that mostly
benefit their larger counterparts, according to Credit availability in Canada, a just-released executive research report by the Canadian Financial
Executives Research Foundation (CFERF), and sponsored by Ernst & Young.
The survey of Canadian senior financial executives, combined with
insights gathered at an executive research forum, clearly shows that
credit conditions have improved since the 2008 crisis and the
subsequent recession, says Michael Conway, Chief Executive and National
President of Financial Executives International (FEI) Canada: "Our
survey respondents indicated that the situation will improve some more,
particularly for the small business segment. Whether the credit
landscape has changed permanently remains to be seen, but companies
will have to think on their feet and look for more innovative ways to
CFERF, the research arm of FEI Canada, surveyed 176 senior financial
executives across the country and completed the project with a
roundtable discussion with CFOs in Calgary and Toronto in February
2011. The report shows that in 2009 and 2010, small companies still
reported trouble accessing working capital and long-term financing.
However, more small companies anticipate a better outlook for the
credit market, with 77% of respondents in this category saying they
expect credit to be available or very available by September 2011.
Small public companies (50%) and small private companies (49%) also say
that credit came at a higher cost, while significantly fewer large
public (23%) and large private (32%) companies say credit was costly.
"These less-than-stellar lending conditions included lower credit
offered at higher rates, tighter restrictions around terms and requests
for more detailed business cases," says Brian Allard, Transaction
Advisory Services Partner at Ernst & Young. "In 2009 and 2010, many
small companies felt that they hit rock bottom and that credit markets
and lending conditions could only improve. Conditions have now improved
significantly, but companies should focus on building meaningful
relationships across a broad spectrum of financial sources."
Finally, the respondents indicated that government assistance programs
proved less useful, particularly for small public and private
companies. Overall, 31% of respondents say they're not familiar with
these programs at all. Just a mere 4% say that they are very familiar
with them. Specifically, many small companies find these programs
ineffective, citing problems dealing with government bureaucracy and
the complexity of lending requirements as key reasons.
Please click here to view the full report.
The Canadian Financial Executives Research Foundation (CFERF) is the non-profit research institute of Financial Executives
International Canada. The foundation's mandate is to advance the
profession and practices of financial management through research.
CFERF undertakes objective research projects relevant to the needs of
Canada's senior financial executives in working toward the advancement
of corporate efficiency in Canada.
Financial Executives International (FEI) Canada is the all-industry professional membership association for senior
financial executives. With 11 chapters across Canada and more than
2,000 members, FEI Canada provides professional development, thought
leadership and advocacy services to its members. The association
membership — which consists of CFOs, audit committee directors and
senior executives in the finance, controller, treasury and taxation
functions — represents a significant number of Canada's leading and
most influential corporations. feicanada.org.
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For further information:
For CFERF and FEI Canada:
Christian Bellavance, Vice President, Research and Communications
416 366 3007, ext. 5114