Good afternoon. My name is Terry Campbell and I am the Vice-President, Policy, for the Canadian Bankers Association. I am joined today by my colleague Marion Wrobel, Director of Market and Regulatory Developments.
We thank the chair and the committee for the opportunity to be here today.
As you may know, the Canadian Bankers Association works on behalf of 50 domestic banks, foreign bank subsidiaries, and foreign bank branches operating in Canada, and on behalf of their more than 263,000 employees. Canadians are justifiably proud of their banks, with their continued strength and stability, at a time when many banks around the world required massive taxpayer bailouts to continue operating and, quite frankly, while many other banks around the world no longer exist.
By contrast, our banks, as a result of being well managed, well regulated, and well capitalized, have not been a burden to taxpayers. In fact, they're continuing to provide financing to both consumers and businesses, including small businesses, through this tough economic period. This is an advantage for Canada as we begin our economic recovery.
On a year over year basis to June 30, 2009, credit authorized to small and medium-sized enterprises, that is the supply of funds by banks, increased by 1.2%, while the amount of credit outstanding, that is the demand for funds by businesses, declined slightly. What this means is that businesses are making sure they have access to credit but are using it only as needed.
The vast majority of bank business customers are small businesses, and banks have continued to work hard to meet their needs. We did a survey of SMEs just last summer, and we found that 89% of respondents felt they had a good credit relationship with their banks, with just 4% who believe they had a poor relationship. Also, 90% of respondents who approached their banks felt that the banks were willing to help them through this tough period, with over 50% noting that banks were very willing to help. Only 5% of bank customers felt that access to credit was their biggest economic challenge.
While the provision of credit to creditworthy businesses remains important, not all SMEs are seeking financing at this time. In fact, our survey found that 68% of owners said they were unlikely to seek additional credit for their businesses in the next six months, likely due in part to decisions to postpone investment and to postpone expansion plans as a result of the recession.
Something that's often overlooked in the question is that banks represent only about one-quarter of the broad business financing market in Canada. A year ago at this time, just as the global financial markets were at their most fragile, Canadian bank lending to businesses accelerated as banks stepped in to fill gaps left as other lenders reduced credit or as other lenders left the marketplace altogether.
Despite the fact that banks stepped in to provide some of the shortfall, they were not able to fill the credit gap completely, and this is where the federal government stepped in. The federal government recognized this in Budget 2009, with the introduction of the business credit availability program, BCAP, which provides at least $5 billion of additional lending to firms with a viable business model. The finance is provided through Export Development Canada and the Business Development Bank of Canada, in cooperation with private sector lenders. Banks are actively engaged with BCAP as part of their efforts to find solutions for creditworthy business clients.
Up to the end of August 2009, the total amount of financing extended under BCAP was approximately $2.7 billion, or almost 6,000 businesses. The vast majority of these businesses, 98% in fact, were small businesses with sales of under $25 million.
It's important to point out that SMEs turn to banks for a variety of business solutions, not just financing. From deposit services to cash management to foreign exchange and succession planning--these types of services--banks work day in and day out to provide advice and to help find solutions for their nearly two million SME clients. In fact, going back to our survey again, when asked about the most important factor in their relationship with banks, an overwhelming majority of 92% of business owners cited having a face-to-face relationship with their banker.
In conclusion, Canada's banks play an essential role in the operation of small and medium-sized businesses and are proud of these positive and long-standing relationships. Our banks remain open for business and are committed to providing credit and a host of other business solutions for SMEs. Banks welcome the opportunity to work with the government and parliamentarians to ensure the continued success of our nation's businesses and to be an instrumental part of Canada's economic recovery.
Thank you for the opportunity, Mr. Chairman.
I look forward to your questions.