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Canada’s SME Lending – And Delinquencies – Spike

Markets in the U.S., Europe and U.K. have generally gotten most of the attention when it comes to developments in small business lending, most notably for their robust alternative financing industries. But Canada is making a name for itself in providing working capital to SMEs.

According to analysis from PayNet, SME lending in Canada rose in the first quarter of 2015, hitting a PayNet Canadian Business Lending Index of 206, up two points from the previous quarter. PayNet president William Phelan attributes this rise to lower energy prices. “The go-go days in oil exploration and production are on hold for a while,” he recently told Reuters. “The move from west to east and from energy producing to consumer-based business is underway.”

The bad news, however, is that loan repayment delinquencies also saw a spike in Q1. According to PayNet data, moderate loan delinquencies – which is the category for failure to pay loan bills after 30 days past due – rose to 2.7 percent in March, up from 2.6 percent in February and up again from 2.2 percent in December.

Severe delinquencies, which are loan bills more than 90 days late, rose slightly from the fourth quarter of 2014 but remained steady this quarter at 0.7 percent, the research found.

PayNet figures published earlier this year raised some concern among Canada’s SME community after reporting a rise in delinquencies for loan repayments.


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