Low Income Entrepreneurs and their Access to Financing in Canada, Especially in the Province of Quebec/City of Montréal
This paper studies Canada's microfinance industry, focusing on financial access for low income entrepreneurs in the Province of Quebec and the City of Montréal. It reviews the history of the industry, national and local entrepreneurship statistics, demand for and supply of payday loans, factors affecting microfinance sustainability in Canada and active microlenders.
The paper examines existing microfinance programs in Montréal and Quebec and estimates the size and composition of underserved populations. Findings include:
- Credit union membership is very high in Canada and serves the needs of low income entrepreneurs;
- Government programs that support entrepreneurial development focus more on job creation than poverty alleviation;
- Scotiabank is the only major Canadian chartered bank active in microfinance activities and only in developing countries;
- Intention of entrepreneurial activity is lower in Quebec relative to the rest of Canada, and is concentrated among the lowest income populations;
- A High proportion of Quebec SMEs mentioned securing finance as the main obstacle to investments;
- Quebec has lower legal annual percentage rates (APR) than the rest of Canada, effectively banning payday lending activities;
- Montréal is the only region in Quebec with rising unemployment rates.