SME Financing in Canada, 2002 — Part I: Other Sources of Financing

Supplier Credit

Supplier credit, sometimes referred to as trade credit, is a type of financing whereby a supplier gives a firm a period of delay, often 10 to 30 days, to pay its invoices. In 2000, 29 percent of Canadian SMEs made purchases using supplier credit (See Tables 13 and 14 below). Only 4 percent of SMEs that attempted to finance a purchase with supplier credit reported being turned down.

The following are key findings concerning the use of supplier credit:

• Larger SMEs: were more likely to use supplier credit than smaller SMEs. In 2000, 53 percent of SMEs with more than 100 employees used supplier credit.
  
  
• KBI sector: firms in this sector were slightly more likely to have a request to use supplier credit refused.
  
  
• Manufacturing sector: firms in this sector were most likely to use supplier credit, while those in the professional services sector were least likely to use supplier credit.
  
  

Source: Statistics Canada, Survey on Financing of Small and Medium-sized Enterprises, 2000

Source: Statistics Canada, Survey on Financing of Small and Medium-sized Enterprises, 2000