Slight decline of average debt load for small and medium-size Canadian businesses
By CO Staff @canadaone | March 27, 2006
The total debt carried by Canadian businesses rose slightly between 2000 and 2004, with larger businesses in terms of employee size having a higher outstanding debt.
Companies with 1 to 4 employees had average debt of $187,000 in 2004. Those with 5 to 19 employees carried an average of $489,000 in debt, while the average among businesses with 20 to 99 employees was $2.2 million.
Small- and medium-sized businesses cited "personal savings" and "retained earnings" as the most important sources of financing continuing operations. Others were lines of credit, trade credit of suppliers, commercial loans and personal credit cards. These were also the sources most frequently cited in 2000.
While the total debt for all businesses increased, the average debt for each business declined by 5.1% between 2000 and 2004 as the number of businesses rose faster than the total debt during the four year period.
Canadian small and medium sized enterprises carried $377 billion in total debt outstanding in 2004, up 4.7% compared with $360 billion four years earlier. Businesses carried an average debt of $278,000 in 2004 compared to $293,000 in 2000.
On a sectoral basis, average debt rose slightly between 2000 and 2004 among businesses in three key sectors: wholesale and retail trade; tourism; and agricultural and primary industries.
The average outstanding debt among manufacturing businesses declined by about 25% to $390,000 while their total debt fell by 15% to approximately $29 billion.
Table: Total* and average liabilities outstanding
| 2000 | 2000 | 2004 | 2004 | |
| Total | Average | Total | Average | |
| $ billions | $ | $ billions | $ | |
| All small and medium sized enterprises | 360 | 293,000 | 377 | 278,000 |
| Selected employee size groups | ||||
| 1 to 4 | 75 | 155,000 | 82 | 187,000 |
| 5 to 19 | 101 | 481,000 | 89 | 489,000 |
| 20 to 99 | 71 | 1,564,000 | 77 | 2,212,000 |
| Selected industries | ||||
| Agriculture/primary | 55 | 325,000 | 60 | 346,000 |
| Manufacturing | 34 | 528,000 | 29 | 390,000 |
| Wholesale/retail trade | 69 | 342,000 | 73 | 344,000 |
| Tourism | 24 | 290,000 | 32 | 298,000 |
* Total debt is comprised of all liabilities on business' balance sheets. It includes loans and mortgages from banks and other financial institutions, credit card balances, lease obligations, credit obtained from crown corporations, short-term trade credit owed to suppliers and loans from private individuals.
Source: Statistics Canada
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