Rising loan rates and inflation have driven down bank satisfaction for small businesses across Canada
Satisfaction among Canadian small businesses with their primary banks has dropped in 2024, driven by high interest rates on credit and business loans, along with increased costs of materials and labour.
According to the J.D. Power 2024 Canada Small Business Banking Satisfaction Study, satisfaction levels have fallen by 21 points from 676 to 655 on a 1,000-point scale.
The study reveals that satisfaction among small businesses with debt has seen a sharper decline, dropping 33 points.
Conversely, businesses without debt experienced a 10-point rise in satisfaction. Different debt types, particularly term loans, commercial real estate financing, and the Canada Small Business Financing Loan (CSBFL), have emerged as key dissatisfaction factors.
Paul McAdam, senior director of banking and payments intelligence at J.D. Power, noted that the Bank of Canada’s recent rate reductions have not yet provided noticeable relief to small businesses.
“Six in 10 small business customers cite inflationary pressure as a key factor weighing on their financial health,” said McAdam.
He also pointed out that the challenging macroeconomic environment has been compounded by service delivery issues from banks, with declining satisfaction in areas such as problem resolution, new account openings, automated phone services, and assisted online services like email, web forms, and in-app messaging.
Despite dissatisfaction with borrowing costs, many small business customers report strong access to credit from their banks.
Of the small business customers surveyed, 87 percent say they have excellent or good access to credit, and 86 percent of those who applied for credit in the past year were approved.
The study also ranks CIBC as the highest in small business banking satisfaction for the second consecutive year, with a score of 659. BMO follows closely with 658, while RBC Royal Bank and TD Bank are tied at 656.
Now in its sixth year of publication, the study, conducted between June and August 2024, collected responses from 2,436 small business owners or financial decision-makers.
