Analyzing Financial Assistance Problems for Canadian SMBs

This report delves into the financial challenges encountered by small businesses in Canada when seeking financial assistance from Canadian banks. It begins by highlighting the difficulties small businesses face in securing capital, particularly in a competitive market. The research explores the various financial assistance options available, including loans and equity financing, while also identifying the problems associated with each. The study utilizes interviews with managers, employees, and owners of small businesses to understand their perspectives on issues such as the time and effort required to find investors, the imposition of ownership or control by investors, and concerns about equity financing. The report investigates the vital issues related to small business operations while gathering financial assistance, approaches to overcome these challenges, and the likely effects of these issues. The findings emphasize the need for the development of a business angel network to connect potential investors with small businesses, along with recommendations to improve financial situations. The report ultimately provides a comprehensive analysis of the problems faced by Canadian small businesses in obtaining financial assistance and suggests potential solutions.

PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL
ASSISTANCE
Small Businesses in Canada Face Problems While Undertaking Financial Assistance from
Canadians Banks

1PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
Executive Summary
Canadian Banks are greatly well capitalised in comparison to their peers existing in other nations
and are also better equipped to loan money to a worthy small organisation than they have been
over the past years.
The research question developed intended to explain various issues that are faced by the small
business organisations operating in Canada at the time of undertaking financial assistance from
the Canadian banks.
The individual interview method has been supportive in consideration to the fact that through
following non-probability convenient sampling technique, the managers, employees along with
the small business owners were involved within the interview session.
The research revealed that while the small businesses consider obtaining equity finances from
the Canadian banks they are concerned regarding challenges regarding the time and effort
needed to find the right investor for the business. The investors also tend to impose some
ownerships or controlling interest on the small businesses along with taking part in the business
decisions. This can turn out to be a concern for these Canadian small scale companies.
Based on the study findings recommendations are offered to the small businesses of Canada
regarding development of business angel network that can bring the potential investors along
with the small businesses together with additional benefits. Development of such business angel
networking might have relevant experience along with expertise that can offer advantages in
several small company situations.

2PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
Acknowledgement
I feel great pleasure in acknowledging the assistance along with contributions of several other
individuals in contribution to the success of the dissertation. Firstly, I would prefer to thank my
supervisor for her support, ideas along with feedbacks at the time of the proceeds in completing
this dissertation. Devoid of her support and guidance, this dissertation cannot be accomplished
within time. Finally, I would also like to express my gratitude to my peers for their total support
along with encouragement.

3PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
Table of Contents
Chapter 1: Introduction....................................................................................................................6
1.1 Research Background.......................................................................................................6
1.2. Research Problem and Significance.....................................................................................7
1.3. Research Aim and Objectives...............................................................................................8
1.4. Research Questions...............................................................................................................8
Chapter 2: Literature Review.........................................................................................................10
2.1. Introduction.........................................................................................................................10
2.2. Financial Assistances offered By Canadian Banks............................................................10
2.3. Financial Problems Dealt by Small Businesses..................................................................11
2.4. Challenges and Problems Dealt by Small Companies in Attaining Financial Assistance
from Canadian Banks................................................................................................................14
2.5. Solutions to Businesses faced while Undertaking Financial Assistance............................16
2.6. Research Gap......................................................................................................................18
2.7. Theoretical Framework and Hypotheses............................................................................19
Chapter 3: Research Methodology................................................................................................21
3.1. Introduction.........................................................................................................................21
3.2. Research Design, Philosophy and Approach......................................................................21
3.3. Participants and Data Sources............................................................................................22
3.4. Researchers Role................................................................................................................23

4PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
3.5. Data Gathering Techniques................................................................................................23
3.6. Data Analysis Method........................................................................................................24
3.7. Trustworthiness of the Method...........................................................................................25
3.8. Summary.............................................................................................................................25
Chapter 4: Presentation of Results.................................................................................................27
4.1. Discussion of Interview with Manager...............................................................................34
4.2. Discussion of Interview with Employee 1..........................................................................34
4.3. Discussion of Interview with Employee 2..........................................................................35
4.4. Discussion of Interview with Owner 1...............................................................................35
4.5. Discussion of Interview with Owner 2...............................................................................35
Chapter 5: Analysis of Data...........................................................................................................36
5.1. Analysis of the Interview Responses Provided by Managers, Employees and Small
Business Owners on Qualitative Questions...............................................................................36
5.1.1. Response for Interview Question 1..............................................................................36
5.1.2. Response for Interview Question 2..............................................................................37
5.1.3. Response for Interview Question 3..............................................................................38
5.2. Findings on Research Question 1: What are the vital issues related with the small
businesses operations while gathering financial assistance from the banks existing within
Canada?......................................................................................................................................39
5.3. Findings on Research Question 2: What are several approaches through which such
challenges can be dealt with in order to obtain a better financial situation?.............................42

5PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
5.4. Findings on Research Question 3: What are the likely effects of such issues that take place
at the time of attaining financial assistance from the banks within Canada?............................44
Chapter 6: Conclusion and Recommendations..............................................................................46
6.1. Conclusion..........................................................................................................................46
6.2. Recommendations and Future Research.............................................................................49
References......................................................................................................................................53
Appendices....................................................................................................................................60
Appendix 1: Ethics Application Form.......................................................................................60
Appendix 2: Banks Offering Financial Assistance to Small and Large Businesses in Canada 63
Appendix 3: Small Business Lending by Canadian Banks over Years.....................................64
Appendix 4: Interview Transcript for Manager.........................................................................64
Appendix 5: Interview Transcript for Employee 1....................................................................65
Appendix 6: Interview Transcript for Employee 2....................................................................66
Appendix 7: Interview Transcript for Owner 1.........................................................................67
Appendix 8: Interview Transcript for Owner 2.........................................................................68

6PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
Chapter 1: Introduction
1.1 Research Background
In the era of highly competitive business environment, it has been revealed that when the
small businesses aim to address needs of a market niche, the necessary amount of capital is quite
complex to attain that can further impact the ability to undertake a project in an effective manner
(Alvesson and Sköldberg 2017). Despite the fact that the banks in Canada have offered sufficient
financial assistance through offering loans to the organisations, still there might be certain
uncertainties related with poor sourcing of credit by the smaller organizations. This can also
impact their capability to sustain within the competitive business surrounding (Bebchuk, Cohen
and Hirst 2017).Canadian Banks are greatly well capitalised in comparison to their peers existing
in other nations and are also better equipped to loan money to a worthy small organisation than
they have been over the past years (Alvesson and Sköldberg 2017). It has also been observed that
the financial position for all the Canadian small businesses is also observed to be improving.
Considering same, it has also been evident that the business insolvencies are decreased by 17%
in the year end in comparison to the previous year (Bebchuk, Cohen and Hirst 2017).More than
70% of the small business owners are evidenced to fail in their 10th year of business and around
20% of small business fail in the first year of their business surrounding (Bebchuk, Cohen and
Hirst 2017). Certain small businesses in Canada are likely to face difficulties whole seeking
funds from the banks existing within Canada. This is evident for the reason that while the
established businesses find it to be considerably simple to raise finance, the small companies
operating within Canada find it greatly difficult in raising finance for all their operational
activities. For instance, consumer service applications such as Zebdesk faced the issue of initial

7PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
undercapitalisation. There are several factors that are responsible for the financial problems
faced by the small businesses in their attempt to raise finance that includes risk, lack of credit
sourcing, absence of enough press coverage, intertwined position, maturity along with interest
rated bias (Becherer and Helms 2016). Certain issues related with equity finance such as absence
of market trust, equity space and absence of exit route causes problems for the small businesses
to attain adequate finds for their business operations for the Canadian banks (Bresler. and Stake
2017). The study is intended to analysevarious issues that are faced by the small business
organisations operating in Canada at the time of undertaking financial support from Canadian
banks.
1.2. Research Problem and Significance
The research subject was analysed because of the associated advantages that can be
obtained from the small businesses along with the overall industry. This research has
significance in identifying several issues which can take place at the time of attaining financial
assistance in the form of loans and financial advices from the banks existing within
Canada(Brigham, Nason and Gessaroli 2016). However, these banks in Canada offer financial
support to large as well as small businesses with the objective of attaining a huge amount of
interest and profit from them. Focused on such research problem, the research has increased
significance in analysing several concerns related with the management of financial support from
the Canadian banks (Brigham, Ehrhardt, Nason and Gessaroli 2016). This can also therefore
enable all the precautionary measures in dealing with the issues faced at the time of gathering
financial support from the banks operating within Canada.
The significance of the research subject is to attain the study objectives of knowledge
acquisition and with the objective of developing solutions required to deal with the financial

8PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
concerns which might be faced by the small businesses at the time of attaining help from the
banks within Canada. In consideration to the financial concerns dealt by the small businesses, it
is vital to take into consideration that there are several important aspects necessary in facilitating
better contributions to the research related factors. Furthermore, the current research is also
focused on recommending solutions for addressing the financial needs of the small businesses.
1.3. Research Aim and Objectives
The aim of the current study is to evaluate major challenges dealt by small business
organisations while taking financial support from Canadian banks. The research objectives that
will be attained after completion of the study are indicated under:
 To recognise range of vital issues elated with the small businesses operations while
gathering financial support from the banks existing within Canada
 To analyse several approaches through which such challenges can be dealt with in order
ensure better financial situation
 To evaluate effects of issues that taking place at the time of attaining financial assistance
from the banks within Canada
 To recommend important measures in dealing with issues taking place at the time of
taking financial assistance from the banks in Canada.
1.4. Research Questions
The research questions to be answered by successful accomplishment of the research are
formulated below:
 What are the vital issues related with the small businesses operations while gathering
financial assistance from the banks existing within Canada?

9PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
 What are several approaches through which such challenges can be dealt with in attaining
better financial position?
 What are likely effects of such issues that take place at the time of attaining financial
assistance from the banks within Canada?
 What are recommended measures in dealing with issues taking place at the time of taking
financial support from the Canadian banks?

10PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
Chapter 2: Literature Review
2.1. Introduction
The literature review chapter considered analysis and existing arguments in the past
researches on research subject that analysed the challenges faced by small businesses in Canada
in obtaining financial assistance from the banks existing within Canada (Calomiris and Haber
2015). This chapter also focussed on analysing the findings from various past researches
regarding financial assistance offered by the Canadian banks, financial funds attainment
problems faced by them from domestic banks and solutions offered to businesses by several
researchers on best ways to attain funds for their small businesses.
2.2. Financial Assistances offered By Canadian Banks
Campbell and Cartwright (2017) revealed in their research that business owners in
Canada generally report that attaining enough financing for their businesses turns out to be
highly challenging factor of operating business. There are several government as well as private
sector financing sources existing within Canada that can facilitate large and small businesses to
develop their businesses. This can include business loans, capital, indigenous entrepreneur loan,
new Canadian entrepreneur loan, small businesses loan for existing companies, start-up
financing, farm credit Canada for various loans and lending options and the agricultural loans act
program (Campbell 2017). Campbell and Cartwright (2017) stated that the large and small
businesses of Canada also have access to private setup financing for their business operations.
For instance, Canada’s major financial institutions like the banks, cooperatives and the credit
unions. Based on the type of businesses these companies intend to start, they have the access to
secure venture capital or financing from the Canadian angel investors. Campbell (2017) added

11PROBLEMS FACED BY SMALL BUSINESSES IN CANADA IN FINANCIAL ASSISTANCE
that certain other sources of the private sector financing can be in debt and equity financing form
available from the financing institutions for addressing business needs of the small and large
businesses in Canada. The researcher also revealed that before attaining any financial assistance
or loan from the Canadian banks, the banker evaluate whether the small or large scale
organization represents an acceptable risk for the and whether will be capable to pay off their
obligations against the loan. Such risk assessment carried out by the Canadian banks also
impacts the rate of interest the companies pay on loan (Crane et al. 2019).
Cunningham, Gök and Larédo (2016) explained that it also determines whether the
business will get their desired financial assistances or loan along with the lending terms and
conditions. A banker of the Canadian financial institutions will be quite hesitant in lending
financial assistance in case the organisations assets along with performance signifies as
inacceptable risk level. Once the loans get approved by the Canadian financial institutions they
consider carrying out yearly reviews in order to attract the loan's performance in a situation
where the loan performance on a Canadian business risk turns out to be unacceptable, the
bankers are likely to demand for any additional collateral security or demand complete
repayment.
2.3. Financial Problems Dealt by Small Businesses
As indicated within the research of Dumay and Cai (2015) it was gathered that small
business companies operate with a promise and in a situation the leader or manager of the
company has a sound mission and vision then the activities turn out to be simpler. This further
promotes innovation along with suitable project management techniques. These researchers also
confirmed that in order to ensure management of an exceptional fraction of working capital
along with enough financial resources, the small businesses requires to secure the initial funding