22- Oct-2008

The Bank of Montreal wants to do business with small business, Carolyn Booth, New Brunswick and Prince Edward Island district vice-president, said Friday. The bank will train loans officers and increase their authority to become the leading lender to small entrepreneurs, she said in an interview.

"We're certainly making inroads there." Booth, based in Saint John, made these comments in response to concern among small business people about bank financing with world markets in turmoil.

This week, 28 per cent of owners who responded to the Canadian Federation of Independent Business' Business Barometer survey reported problems getting access to bank financing, up from 26 per cent last week - and only 18 per cent in September

Unsecured loan and credit line products--those which do not require the collateral of a house or automobile--have become much more appealing as the housing market crashes and consumer credit tightens, the study said.

The federation normally does the Business Barometer survey quarterly, but decided to do a weekly survey beginning Oct. 6 to gauge business confidence while world financial markets sort themselves out.

The Business Barometer index, based on responses from 639 business owners on Tuesday and Wednesday of this week, increased to 94.4 from 90.6 last week, but still down from the quarterly index of 101.8 in early September. "It's slightly up, it shows that small business is regaining some confidence," Andreea Bourgeois, the federation's director of provincial affairs for New Brunswick, said in an interview this week

The index increased despite the trouble with their bankers. "I wouldn't link the two," Bourgeois said. "The index increasing is just showing their expectations for their own businesses for the next 12 months.

" They find other sources of financing - credits cards, possibly, or family and friends - when the banks will not give it. "Small businesses are very creative in general," she said. "They always find some kind of an alternative."

The Bank of Montreal claims to have 25.7 per cent of the small business market in Atlantic Canada, its highest market share in the country, up from 17.5 per cent in 1999 and only about 3.3 per cent behind the leader, the Royal Bank of Canada. BMO intends to overtake RBC, Booth said.

The Bank of Montreal approves 95 per cent of loans processed in Canada under $1.5 million, partly because regional headquarters have the authority to approve commercial loans up to $20 million "without going outside Atlantic Canada," Booth said.

Some individual loans officers out in the branches with the right training and experience can approve loans up to $12 million, she said. "These credit managers, most of them have lived and worked in Atlantic Canada their whole lives."

The bank will stick with its plan of courting small business regardless of the gyrations of late in stock markets around the world. Steps include building a team of small account managers, and cash management specialists to set up systems for payments, payroll, foreign exchange and the like.

Federation members would welcome news that one of the big banks approves 95 per cent of small business loan applications, Bourgeois said. They also welcome action by government's around the world to support the banking system, she said

Sources:-http://nbbusinessjournal.canadaeast.com