SME Financing Outlook (BDC Capital)

Summary

• Banks and credit unions remained the main lenders for 63% of SMEs, while 27% applied to government programs and 16% to Crown corporations.p.4
• Over the next 12 months, 19% of SMEs plan to request financing, a proportion unchanged compared to June 2021.p.4
• Among businesses planning to seek financing in the next 12 months, 51% believe it will be easy to obtain.p.4
• Of the SMEs planning to request $500,000 or more in financing, 62% intend to allocate the capital to growth-related projects.p.14

Key insights

1. Online applications surpassed in-person applications, with 15% of SMEs applying online compared to 13% at a physical branch.p.7
2. Short-term instruments dominated demand, led by lines of credit at 44%, business credit cards at 25%, and working capital loans at 24%.p.8
3. Fintech online lenders and large technology companies were utilized by 9% and 8% of applicants respectively.p.9
4. The rejection rate for financing requests fell significantly from 10% in June 2021 to 5% in October 2021.p.10
5. Small ticket sizes represented the largest share of intended borrowing, with 30% seeking less than $100K.p.12
6. For businesses expecting difficulties obtaining capital, the primary concern was an unstable industry cited by 41% of respondents.p.16
7. Among SMEs not planning to request financing over the next 12 months, 61% stated they do not need money.p.17