Covid-19 Small Business Survey Results (CLA)

Toronto, May 26th, 2020 – Canadian Lender Association has completed a comprehensive national survey in cooperation with its fintech lenders. CLA members finance over 100,000 micro, small and medium sized businesses nationally.

The survey results indicate that even with the deployment of the Business Credit Availability Program (BCAP), small businesses struggle to overcome liquidity issues. Of the businesses unable to sustain themselves on Canada Emergency Business Account (CEBA) loans, most have turned to banks for additional government supported financing; however, approximately 6 out of 7 businesses reported that they were unable to access it.

Businesses on the ropes

Consistent with Canadian Federation of Independent Business (CFIB)’s small business survey in April, social distancing measures have created a cash flow crisis for Canadian MSMBs. 

  • Half of merchants reported a decline in sales of between 80%-100%
  • A third of businesses report that they may run out of cash in under a month
  • 49% of merchants say they have or are planning to lay off their entire staff

Funding options

49% of merchants reported that the most urgent immediate need was to find additional financing. 37% of CLA funded merchants were unable to claim the $40,000 CEBA loan. Half of all businesses reported that CEBA would be insufficient to cover expenses and enable them to survive the present Covid-19 crisis. 

What options remain?

Of the businesses unable to sustain themselves on CEBA, most have turned to banks for additional financing. The BCAP includes a co-lending program between BDC and approved financial institutions. Approximately 85% of businesses failed to meet approval criteria.

“Many merchants in the survey voiced frustration in not having a sufficient credit history to qualify for a bank loan.” explained Gary Schwartz, President of the CLA. “Mainstreet mom-and-pop businesses in this country relied on fintech lenders for access to capital pre-Covid and we want to make sure that fintech lenders are here to service this important sector as we move towards an economic recovery.” 

The Canadian Lenders Association (CLA) and Kilgour Williams Capital (KWC) have made a joint proposal to the federal government to create a government-owned funding vehicle to provide Main Street small businesses with affordable capital sufficient to sustain them through restarting their operations, rebuilding their business, and growing through the recovery.  A copy of this proposal can be found here https://www.canadianlenders.org/press/proposal/

To learn more about the Canadian Lenders Association (CLA), please visit www.canadianlenders.org.

For more information please contact:

Tal Schwartz
Head of Strategy
Canadian Lenders Association
tal@canadianlenders.org
+1 (514) 244-2008

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