Thursday, September 24, 2009

Canadian Business Loans Experiencing Dramatic Decline in 2009

After four years of double digit loan growth in Canada, outstanding business loans dropped dramatically in 2009. Tightening credit conditions and the uncertain economic outlook in the United States is driving the decline. Canadian businesses are facing significantly higher borrowing costs, tougher credit standards, and reduced credit lines. (Double click on image to enlarge)

Looking at month-over-month data in Slide 2, 2009’s Canadian decline has not been as steady as the decline experienced in the United States. Similar to the US, the decline in business mortgages is half that of the decline in non-mortgage loans (-8% vs. -16%).

As seen in Slide 3, the Bank of Canada Senior Loan Officer Survey (SLOS) shows similar tightening of credit conditions for Canadian businesses as we see in the United States. As in the US, the past two quarters are showing some easing in lending conditions. The SLOS reported tightened conditions are most prevalent in struggling industries such as automotive, forestry, and transportation.

The next posting will discuss business lending conditions in the Euro Area where lending has stayed steady throughout 2009. 

1 comment:

  1. The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.