Investment and Financing Outlook Survey: January 2024 (BDC Capital)

Summary

• Economic pessimism among Canadian SMEs eased slightly, with 45% expecting economic conditions to deteriorate over the next 12 months.p.4
• Operational profitability remained steady, with 60% of surveyed SMEs indicating they were profitable in the past 12 months.p.10
• Investment spending intentions remain stable, as 84% of SMEs plan to invest about the same amount or more compared to the previous year.p.26
• Financing approval rates returned to 77% for businesses requesting credit in the preceding three months.p.35
• Demand for short-term credit options bounced back, representing 74% of SMEs intending to seek financing.p.38
• Small-value funding requests dominate prospective demand, with 41% of SMEs planning to request funding up to $100,000.p.39

Key insights

1. Fewer SMEs anticipate economic conditions in Canada will deteriorate, dropping from 52% in October 2023 to 45% in January 2024.p.11
2. Sales expectations remain restrained, as 45% of respondents expect total sales to remain the same and 38% expect an increase.p.12
3. Existing debt burdens continue to constrain growth, with 30% of SMEs reporting that debt repayment limits their business activities.p.17
4. Improving operational efficiency and productivity is the primary investment goal, cited by 39% of businesses planning investments.p.19
5. Intangibles represent the most planned investment category, with 41% of SMEs intending to spend on software, IP, R&D, marketing, or training.p.23
6. High economic uncertainty (36%) and elevated interest rates (34%) are identified as the main factors limiting investment plans.p.28
7. Traditional financial institutions remain the predominant source for financing, used by 70% of SMEs requesting credit.p.34
8. Perceived access to credit improved slightly, with 51% of prospective borrowers expecting it to be easy to obtain financing.p.41