Investment & Financing Outlook: SME Business Investment and Financing Outlook Survey, Wave 22 (BDC Capital)

Summary

• Among Canadian SMEs, 60% reported being profitable over the last 12 months, while 81% operated below full capacity.p.4
• Regarding macroeconomic expectations, 40% of SMEs expect economic conditions in Canada to deteriorate over the next 12 months, while 40% expect them to remain about the same.p.11
• Investment intentions remain subdued, with 42% of SMEs planning to invest in intangible assets, 37% in machinery and equipment, and 22% in non-residential buildings.p.5
• Among SMEs planning investments, the leading goals are improving sales and marketing (41%) and becoming more efficient or productive (35%).p.19
• In the preceding three months, 25% of SMEs requested financing, and 78% of applicants were authorized in full or in part.p.6
• Looking ahead, 19% of SMEs plan to request financing in the next 12 months, with 75% seeking short-term financing and 41% intending to borrow to cover expenses, salaries, and other obligations.p.6
• Among SMEs intending to seek financing, 53% expect obtaining funds to be easy, down from 58% in April 2024.p.41

Key insights

1. 1. SME profitability remained stable with 60% reporting profitability and 27% breaking even over the past 12 months.p.10
2. 2. High economic uncertainty (30%) and interest rates (26%) remain the primary factors limiting business investments.p.28
3. 3. Software remains the most common intangible investment category, cited by 64% of SMEs planning intangible investments.p.24
4. 4. Only 52% of SMEs planning investments are confident they will pursue them over the next 12 months.p.29
5. 5. Primary financial institutions remain the dominant channel for financing applications, utilized by 73% of SME borrowers.p.34
6. 6. Demand for working capital loans surged to 34% among SMEs planning financing requests, up from 23% in the prior wave.p.38
7. 8. Of SMEs not planning to request financing, 61% stated they simply do not need additional funding.p.43