Entrepreneurs remain optimistic about prospects for their businesses despite the recession, but tight credit conditions continue to present problems for many companies, a recent Business Development Bank of Canada survey has found.

The BDC survey of 231 entrepreneurs, conducted in May, found that a hefty 86% of respondents were very or somewhat optimistic about their company’s growth potential.

But respondents were less upbeat when asked about the potential for broader economic growth. Optimism fell to 75% when the entrepreneurs were asked about their industry’s potential for growth and 60% for the economy as a whole.

“Entrepreneurs see opportunities where others may see only difficulties,” said Edmée Métivier, executive vice-president of financing and consulting at BDC. “The SME sector has always contributed the lion’s share of economic growth and, as a result, it will be pivotal to an economic recovery. More than ever, lenders to the SME market need to bring a flexible approach to their financing and investment decisions.”

Entrepreneurs pointed to tightening credit as the biggest factor that may adversely affect business growth in the near future. Of the entrepreneurs surveyed, 70% identified tight credit as a negative for growth, followed by the recession at 65%, increased fuel costs at 45% and material at 40%.

Positive factors for business growth in the near future include a stable economy, according to 59% of respondents, the value of the Canadian dollar, according to 41%, and a strong labour market, according to 41%.

Two out of five entrepreneurs said they have experienced tight credit in recent months. Nearly half of respondents had recently sought financing, with 34% being successful and 40% failing. One quarter of entrepreneurs were still awaiting a response to their request.

The survey found 70% of entrepreneurs were seeking operating lines of credit, 28% were seeking term loans, 22% were pursuing business credit cards and 18% were applying for commercial mortgages.

IE