Institutional Financing of Small Business in Nova Scotia

This study, the third in the series Atlantic Provinces Studies, examines the availability of credit to small businesses in a relatively un-industrialized province. Its aim is to determine whether the financial institutions operating in Nova Scotia provide credit for the purposes and terms likely to be required by small manufacturing firms in various phases of their development, and to determine the factors influencing the extension of credit to such firms.

This is the first description of the lending practices of Canadian financial institutions based upon personal interviews with lending officers of the branches of those institutions. The focus on the branch level provides hitherto unavailable data on how branch managers, particularly of the chartered banks, see and discharge their responsibilities, and it provides bases for determining the nature and effect of constraints placed upon them by higher levels of management. This study is based upon these interviews and upon a questionnaire sent to small businesses in the province.

The first chapter describes the objectives and methodology of the study, outlines the problems of the Nova Scotia economy, describes the manufacturing industry in the province, and outlines the problem of small business financing. The next five chapters describe the chartered banks as credit sources, and one chapter each is devoted to government loan programs for business and to private organizations which might supply funds to small businesses. Chapter 9 presents the general conclusions and recommendations arising out of this study.

This book will interest all those in government and in private firms who are responsible for the extension of intermediate and long-term credit to small manufacturing firms. It will also interest economists concerned with regional inequality and the credit system.