Small and Medium-Sized Enterprises in British Columbia

Christine Carrington, Industry Canada (National Capital Region)
Amy Mar, Industry Canada (Pacific Region)

Because small and medium-sized enterprises (SMEs) account for nearly all businesses in British Columbia, they are strong drivers in job creation and provincial economic growth. SMEs are also strong contributors to productivity, and have led larger firms in productivity growth in the last 10 years.^{Footnote 1} The big role that SMEs play in B.C.'s economy requires a sound infrastructure to facilitate their growth and expansion. Access to financing is critical for these businesses to develop and expand. This article provides an overview of the characteristics of SMEs in B.C. and looks at the differences in financing activity between the average B.C. firm and the average Canadian firm, using data from the SME Financing Data Initiative.

Summary of Key Findings: British Columbia is home to a wide variety of SMEs in all industry sectors. The financing activity and needs of B.C.'s SMEs are very similar to the average Canadian firm. In B.C., debt is typically the most requested form of financing by SMEs, with a small number of firms seeking equity financing, as is the case in the rest of Canada. Risk capital is a growing source for capital among high-growth and technology-focused SMEs in British Columbia, particularly as provincial tax-credit programs encourage investments at the early stage.

Definitions
This analysis defines small and medium-sized enterprises (SMEs) as commercial (for-profit) businesses with fewer than 500 employees and less than $50 million in annual revenues.

Excluded are non-profit and government organizations, schools, hospitals, subsidiaries, co-operatives, and finance and leasing companies.

This analysis compares the profile and financing activity of SMEs in British Columbia with national averages.

^{Footnote 1} RBC, "Small and Medium-Sized Businesses are Driving Productivity Gains," October 2006.

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