The Financing of Immigrant-Owned Firms in Canada

Using data from the 2011 and 2014 Survey on Financing and Growth of Small and Medium Enterprises, this paper examines access to financing by immigrant business owners. It documents the main financing sources of immigrant‑owned and Canadian‑owned small and medium‑sized enterprises (SMEs). The results suggest that financing sources tend to be similar for the two groups, although immigrant owners tend to turn to formal financial institutions less often than their Canadian‑born counterparts. The paper further explores whether immigrant‑owned SMEs have greater difficulty accessing financial capital than SMEs with Canadian‑born owners. Immigrant owners are less likely than Canadian‑born owners to seek financing from any source, but their applications are just as likely to be approved as those of Canadian‑born owners. Both immigrant and Canadian‑born owners reported that, among the seven potential obstacles to growth presented in the survey, access to financing was the least important. The study finds weak evidence to suggest that access to financial capital is a more serious issue among immigrant‑owned SMEs than among SMEs with Canadian‑born owners.

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