Access to working capital essential to the success of Canadian small businesses

It’s been a trying time for Canadian small business owners this past year. From restaurants to beauty salons, many small and medium-sized enterprises (SMEs) are still in ‘survival mode’ and counting on Canadian consumers for support. To help us better understand the current environment for business owners and uncover how they are reacting as the global economy and business conditions shift in 2021, we commissioned the American Express SME Recovery Survey, a study of 500 SMEs across Canada.

The study unsurprisingly revealed that amid navigating the COVID-19 pandemic, many small business owners don’t feel they have the capital they need to maintain operations. In fact, only 40 percent believe that with their current cash flow they can maintain operations for more than six months. In addition, we found that many small business owners have had to make personal sacrifices to ensure their businesses stay on track, with 65 percent of business owners saying they haven’t treated themselves since the pandemic began.

Only 40 percent of small business owners believe that with their current cash flow they can maintain operations for more than six months.

Despite these challenges, Canadian SMEs have demonstrated incredible resilience, creativity, and ingenuity during this time, as they look to rebuild their businesses. With many dealing with instability and financial constraints imposed by the pandemic, they’ve acted quickly and strategically to stay afloat. Moreover, many have taken immediate action to adjust their business models for the changing landscape, reducing operating costs, implementing cost-savings programs, and leveraging technology to modernize their businesses.

They also continue to find new ways to fuel business growth. Revamping marketing, exploring new customer segments, and diversifying product or service offerings are only a few of the ways Canadian SMEs are driving business growth in 2021. Many are also seeking to improve their digital presence, something that remains critical, especially with more and more people spending time and shopping online.

While many small business owners feel inspired to reinvest in themselves and their businesses this year, they see access to loans as a must to survive the pandemic, grow their business and innovate. However, accessing these necessary funds is not always easy for small business owners. According to our research, only one in five Canadian SMEs who sought loans described the process as hassle-free. Some of the common roadblocks included difficulties with the required paperwork, difficulties understanding the terms and conditions of the loans, and lack of personal assets to secure the loan.

Right now, small business owners are under a great deal of pressure to access cash flow quickly so that they can ultimately reignite growth. They don’t have time for delays or cumbersome, complicated processes. That’s why we’re starting to see more small businesses turn to FinTech companies to receive the fast funding they need. We’re also seeing strong demand for digital platforms that offer quick and simple lending solutions.

In response to the rise in digital payments and growing demand for fast and easy access to working capital, we’ve partnered with FinTech company Linear to launch American Express Business Loans, a first in Canada for Amex. Through Linear’s innovative platform, Business Loans harnesses the power of digital to provide Canadian SMEs with the funding they need quickly. In addition to optimizing loan processes with Linear, we at Amex also worked to increase points of contact to small business owners, including migrating resources from sales-based activities to client management and support. We frequently worked with customers as they pivoted during the pandemic into areas related to e-commerce, and on working capital solutions that recognized the recovery momentum in their business rather than with traditional backwards-looking financial statement data.

With small business owners in Canada needing our support more than ever, now is the right time to expand Amex’s leadership in SME lending globally to deliver business solutions that small business owners can rely on. According to our research, half of Canadian SMEs intend to access a business loan in 2021. This is not surprising considering they report struggling to maintain a steady flow of working capital as one of the biggest challenges.

We, at Amex, are inspired by the small businesses we serve and their ability to navigate this pandemic with such tenacity and velocity. As we look ahead, we, like many Canadian business owners, are optimistic about the future. Knowing the resilience of this group, we are confident that SMEs will do whatever it takes to keep their businesses open and we are prepared to support and provide them with the capital they need so that they are better positioned for future success.

Image courtesy of Unsplash.


Paul Roman

Paul Roman is Vice President & General Manager of Global Commercial Services Canada at American Express Canada. Paul is responsible for the strategic direction, management and growth of a market-leading portfolio of business clients and prospects that spans the small business, middle market, and global multi-national segments. He leads a national team of 250+ employees who are focused on all aspects of the B2B payments space – from Card programs to integrated working capital management solutions.

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