Canada Launches Study on Competitive Fairness for Small Firms
Many small businesses in Canada are facing new challenges because of rising costs and trade tensions and tariffs with the United States.
Now, the Competition Bureau has launched a market study to make sure small to medium-sized companies are being treated fairly by Canada’s big banks.
Small businesses, which are made up of one to 99 employees, are responsible for half the economic output of Canada, and make up 98 per cent of all businesses in Canada, according to the Bureau of Small Businesses.
“The current trade environment obviously puts us in a situation where competition here at home is more important than ever,” said Brad Callaghan, associate deputy commissioner at the Competition Bureau.
The bureau is now raising concerns that new or smaller lenders face barriers to entry, because borrowing costs are higher and the sector is dominated by big banks.
“There are some signs they are facing some persistent challenges in terms over competitive financing terms,” said Callaghan.
“The cost of getting a loan has always been harder for smaller companies as they are seen as bigger risks,” said Corinne Pohlmann with the Canadian Federation of Independent Business (CFIB).
CFIB said small companies face added scrutiny when trying to get loans, and as bank branches close there are fewer chances for face-to-face interactions.
Current trade tensions with the U.S. and a slowing economy are also leaving many concerned about their future.
“Their optimism is definitely down,” said Pohlmann. “People are a little worried and those that are impacted by tariffs are definitely having a tough time.”
“It’s managing things week to week and month to month,” added CEO and founder of Merchant Growth, David Gens. “It’s a game of survival for many of these small businesses.”
Merchant Growth provides financing for small businesses, and Gens said his company can step in to help small businesses that may not be able to get loans from a traditional lender.
“What we are able to do is make it so fast that a business owner can apply in the morning and get funded by the evening and that time savings can be valuable,” said Gens.
The Competition Bureau’s market study will concentrate mostly on term loans. Businesses can take part in the study by going to the bureau’s website to provide feedback. The deadline to take part is October 3rd.
The findings from the study will be released this fall and recommendations could inform the government on how to improve competition that would benefit small businesses seeking loans.
This article was first reported by CTV News
