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Survey of Suppliers of Business Financing
The debt load held by Canadian businesses increased for the second year in a row in 2005. Larger businesses, those with loan authorizations of more than $5 million, accounted for most of the increase.
Commercial suppliers of financing, including banks, finance companies and insurance companies, reported that their Canadian business clients owed them an estimated $411.5 billion, a 10.7% increase from 2004.
The number of business loans also increased by 78,000 to 1.97 million, up 4.1% from 2004.
The debt was mainly in the form of loans, mortgages and lines of credit. Historically low interest rates, rising commodity prices and increased capital investment have spurred business financing requirements.
Over two-thirds of the annual increase in outstanding debt was attributed to businesses with loan authorizations of more than $5 million. Their debt load rose 14.3% in 2005 or by about $27 billion. Overall, these businesses accounted for just over one-half of the total outstanding debt.
In terms of number of loans, these businesses with the largest authorizations levels increased their number of loans by 9.5%.
In contrast, the number of loans among businesses with authorizations of less than $1 million, generally small and medium sized enterprises, increased only 4.3%. Overall, the debt outstanding for these small and medium enterprises was $100.8 billion in 2005.
Banks dominate debt financing, but market share slipping
Domestic banks continued to be the major supplier of debt financing to businesses. In 2005, their outstanding debt financing to Canadian businesses amounted to $210 billion, up 7.1%, or nearly $14 billion, from 2004.
Note to readersStatistics Canada conducts the Survey of Suppliers of Business Financing in partnership with Industry Canada and the Department of Finance as part of a larger program of research into financing for small and medium-sized enterprises. Since most suppliers of financing do not track the employment size of their business clients, they were asked to group their clients by authorization size, by the maximum amount they were allowed to borrow. Authorization size is used in this survey as a proxy for business size for lack of employment size indicators. The survey was based on a census of enterprises in selected finance and leasing industries, including government business enterprises, with assets of $5 million or more. Excluded from the survey were government programs, private not-for-profit organizations and foreign and informal suppliers such as business "angels" and family members. |
Domestic banks accounted for just over one-half (51%) of the Canadian business borrowing market, down slightly from 53% in 2004. The market share of banks has steadily declined since the survey began in 2000.
Finance companies (including government business enterprises) reported the largest percentage increase in debt financing provided to Canadian businesses (22.6%). Their market share increased to 14% of the business borrowing market.
| Suppliers of business financing | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003r | 2004r | 2005 | |||
| market share in % | ||||||||
| Domestic banks | 57 | 56 | 55 | 53 | 53 | 51 | ||
| Other banks | 12 | 11 | 11 | 11 | 12 | 12 | ||
| Credit unions and caisses populaires | 7 | 8 | 9 | 10 | 10 | 10 | ||
| Finance companies | 10 | 11 | 12 | 12 | 13 | 14 | ||
| Portfolio managers, venture capital companies and financial funds | 2 | 3 | 3 | 2 | 2 | 2 | ||
| Insurance companies | 12 | 11 | 11 | 11 | 10 | 10 | ||
| ||||||||
Business debt up in all provinces and territories
Businesses in all of the provinces and territories increased the amount of their debt outstanding in 2005.
The rates of growth ranged from 1.7% among those in Newfoundland and Labrador to 17.0% in Nunavut and 16.7% in Saskatchewan.
Over half of the provinces and territories recorded rates of growth in outstanding debt of 10% or greater.
Businesses in Ontario had $163.8 billion in outstanding debt, an 8.9% increase from 2004. Ontario businesses accounted for about 40% of the total business debt outstanding.
| Outstanding business debt, by province and territory | |||||
|---|---|---|---|---|---|
| 2004r | 2005 | 2004to 2005 | |||
| $ millions | % change | ||||
| Newfoundland and Labrador | 2,873.4 | 2,920.9 | 1.7 | ||
| Prince Edward Island | 1,581.9 | 1,722.4 | 8.9 | ||
| Nova Scotia | 8,531.5 | 9,758.3 | 14.4 | ||
| New Brunswick | 6,022.1 | 6,592.3 | 9.5 | ||
| Quebec | 72,943.3 | 80,242.9 | 10.0 | ||
| Ontario | 150,382.1 | 163,757.5 | 8.9 | ||
| Manitoba | 13,409.9 | 14,556.7 | 8.6 | ||
| Saskatchewan | 12,598.9 | 14,700.7 | 16.7 | ||
| Alberta | 53,302.2 | 61,271.0 | 15.0 | ||
| British Columbia | 49,194.9 | 55,076.7 | 12.0 | ||
| Yukon | 243.9 | 273.1 | 12.0 | ||
| Northwest Territories | 426.1 | 453.2 | 6.4 | ||
| Nunavut | 139.8 | 163.5 | 17.0 | ||
| Total: Canada | 371,650.1 | 411,489.2 | 10.7 | ||
| |||||
Debt in manufacturing sector increases for the first time in five years
Business debt varied widely across industries in 2005.
The manufacturing sector and the real estate, rental and leasing sector each accounted for about 13% of total outstanding debt in 2005, the highest proportion. Businesses in agriculture accounted for 11% of all debt.
Manufacturers increased their borrowing by 17.2% to $53.5 billion. This follows four years of reductions in their outstanding debt. The debt load of Canadian manufacturers may have been affected by various factors. These include the strong Canadian dollar that trimmed revenues from exports, as well as high fuel costs, intense foreign competition, inconsistent consumer demand and manufacturers' decisions to increase capital investments.
Debt among businesses in the real estate, rental and leasing sector increased 14.0% to just under $52.1 billion.
Agricultural industries had outstanding debt of $46.5 billion in 2005, up 6.3% from a year earlier.
| Outstanding business debt, by industry | |||||
|---|---|---|---|---|---|
| 2004r | 2005 | 2004 to 2005 | |||
| $ millions | % change | ||||
| Agriculture | 43,727.0 | 46,469.6 | 6.3 | ||
| All other primary industries | 24,848.6 | 25,531.4 | 2.7 | ||
| Utilities | 8,149.9 | 8,397.0 | 3.0 | ||
| Construction | 25,034.9 | 28,419.8 | 13.5 | ||
| Manufacturing | 45,669.1 | 53,503.8 | 17.2 | ||
| Wholesale trade | 14,367.3 | 16,800.8 | 16.9 | ||
| Retail trade | 34,427.2 | 38,810.2 | 12.7 | ||
| Transportation and warehousing | 16,186.1 | 18,340.1 | 13.3 | ||
| Information and culture | 6,722.4 | 7,582.9 | 12.8 | ||
| Finance and insurance | 34,401.6 | 32,941.6 | -4.2 | ||
| Real estate, rental and leasing | 45,685.3 | 52,098.6 | 14.0 | ||
| Professional, scientific and technical | 10,914.2 | 12,495.1 | 14.5 | ||
| Education and health | 12,641.5 | 14,227.4 | 12.5 | ||
| Entertainment and accommodation | 16,164.0 | 17,702.0 | 9.5 | ||
| All other industries and unknown | 32,711.0 | 38,169.0 | 16.7 | ||
| Total, all industries | 371,650.1 | 411,489.2 | 10.7 | ||
| Knowledge-based industries | 22,032.5 | 22,406.5 | 1.7 | ||
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Leasing growth led by finance companies
Total lease amounts outstanding in 2005 increased 23.6% to $28.7 billion. The gain was mainly reported by finance companies, who reported outstanding leases of $17.9 billion, an increase of 25.7%. Finance companies accounted for 62% of total leases in 2005.
Visit our website for the summary data tables. You can also go to Industry Canada's website for the complete set of tables (http://sme-fdi.ic.gc.ca).
Definitions, data sources and methods: survey number 2514.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Tracy Hart (613-951-4826; tracy.hart@statcan.gc.ca), Industrial Organization and Finance Division.
