Research Series: Financing Main Street

Report#1: SME market share among major banks

Banking is a vital component of operating a business. The financial institution at which an entrepreneur chooses to bank at can have significant impacts on their bottom line and what opportunities are available to their business. For this reason, the Canadian Federation of Independent Business (CFIB) has been taking note of where small businesses do their banking since the early 1980s. CFIB regularly provides a unique perspective in this area by examining the share of small businesses using specific financial institutions for their banking needs.

Previous editions focused on business owners’ primary financial institution where they were currently handling their banking and how trends in small business bank market share have shifted over the years. In this iteration of the report, which is the first update since the COVID-19 pandemic, CFIB takes a closer look at the movement between different banks from 2019 and 2022, and how small businesses make use of secondary financial institutions.

Report#2: SME financing indicators

Small businesses play a crucial role in the economy, contributing to its growth and stability. However, in today's uncertain economic environment, access to financing remains critical. Whether it's maintaining cash flow during financial hardships or supporting growth and expansion during prosperous times, small businesses require adequate financing to thrive.

This report on small business financing indicators provides a comprehensive update on the financing trends for small businesses and the challenges they have faced in seeking funding over the last three years, particularly considering impacts from the COVID-19 pandemic. It offers valuable insights and recommendations to small businesses, financial institutions, and government on how best to support small businesses’ financing needs with the ultimate goal of ensuring that they have the necessary resources to succeed and contribute to Canada's economy.

This is the second report in CFIB’s banking series with one final report to follow. The last report will cover the level of customer service that businesses receive at their main financial institution.

Report#3: A small business rating of their banking services

Small businesses depend on banks for various financial services and the support they receive can greatly impact their day-to-day operations. Knowing this, Canadian banks generally provide a range of products and services tailored to the needs of their small and medium-sized enterprise (SME) clients. The quality of products and services that a small entrepreneur receives, however, varies from one financial institution to the next and often depends on the size and specific requirements of each SME client.

With banking and financing services being so critical to the success of small businesses, it is important to evaluate and understand how financial institutions are performing for their small business clients. Recognizing this, the Canadian Federation of Independent Business (CFIB) has been monitoring how Canada’s banks serve and support SMEs across the country for several decades.

This 2024 edition is the fifth study CFIB has published since 2010 evaluating the performance of Canadian banks in their dealings with small businesses.

Based on feedback collected from their small business clients, this study sheds light on the quality of key banking services provided by financial institutions across the country and uses the findings to score and rank the banks accordingly. It then provides recommendations based on those results for both banks and governments on how to improve the banking experience for small businesses. New to this edition are provincial, regional, and sectoral analyses of small business owners’ level of satisfaction with Canada’s financial institutions. To be noted, due to sample size constraints, HSBC has been excluded from these breakouts.

Also special to this edition is an assessment of how banks responded to the challenges presented by COVID-19. Canadian banks played a crucial role in supporting small businesses during the pandemic by offering financial relief options and guidance, as well as resources to help businesses navigate economic challenges. As the specific support and services varied across institutions, this report also evaluates the pandemic response employed by each bank.

Given that both the successes and shortcomings of the most commonly used financial institutions are highlighted, banks should use the findings in this study to better understand what they do well, and where they can work to improve the quality of the services they provide to their small business clients. Those that can address the areas of concern effectively and implement the recommended changes will likely realize greater returns.