Competition Bureau Canada has announced the launch of a market study delving into the state of competition within the financing sector for small and medium-sized enterprises (SMEs) in the country.
“Access to credit is critical to the survival and success of many Canadian small and medium businesses,” said Jeanne Pratt, acting competition commissioner, in a news release.
The Competition Bureau shared that the study seeks to explore potential improvements for SMEs and the new and innovative lenders supporting them, with a focus on term loans, a commonly used financial product for investing in business growth.
“Our study will examine competition in lending for SMEs, and how it can be improved,” Pratt said. “More competition would make a real difference for growth, investment and innovation.”
The Competition Bureau encouraged Canadians and businesses with experience in the SME financing sector to participate in the study by providing their input in response to the following questions by the Feb. 27 deadline:
- What is the state of competition in SME financing?
- How does competition work within the sector?
- What barriers do lenders face when attempting to enter into or expand in the market?
- What are the possible ways to reduce these barriers?
- How can businesses more easily switch lenders?
While the study will not look into specific allegations of wrongdoing, the Competition Bureau noted that it will investigate and take the appropriate steps if it comes across evidence raising concerns under the Competition Act, 1985.
On an initial basis, the Competition Bureau observed that many SMEs may deem it challenging to access competitive financing options. The Competition Bureau noted that its final report will contain all its findings and its recommendations for governments to make SME financing more competitive.
A public consultation regarding the study’s focus, as well as the minister of industry’s approval of the study’s final terms of reference, preceded the study’s launch.
More on SMEs
In its news release, the Competition Bureau explained that SMEs spur economic growth by investing, innovating, and putting competitive pressure on bigger businesses.
The Competition Bureau also shared the following information relevant to SMEs:
- SMEs comprise over 98 percent of Canada’s employers
- 49.3 percent of Canadian SMEs pursued external financing in 2023