A study issued by Industry Canada – a Comprehensive Review Report on the Canada Small Business Financing Act – has some interesting facts about small businesses loans and the impact of investing in the business. The report was based on loans granted during the 5 years between 2005 and 2009. Even during the 2008 recession there were some very positive results.
- Small businesses that got loans during the period experienced higher level of sales growth than businesses that did not – in some cases 24% higher sales for each year
- Small businesses that got loans had up to 9% more employment growth
- Small businesses that got loans had higher “survival rates” than for non-borrowers
All sounds good except for one fact in the report. The number of small business loans granted during this period declined by almost 30%. So, it looks the typical Catch 22….the report encourages small businesses to get loans to invest in their business but the loans aren’t as readily available as they were a few years ago.