The majority of private Canadian companies haven't had serious challenges accessing financing, according to a PricewaterhouseCooper's 2009 Business Insights report.
Almost 90% of companies surveyed said their 2009 plans have not been compromised by a lack of access to financing. More than 80% said their borrowings have either decreased or stayed the same in the past year.
Eric Castonguay, a managing director with PwC Corporate Finance, said, "This likely means that companies, for the most part, are still able to service their debt and manage through a challenging economic environment."
About 87% of respondents said interest rates either did not increase or only slightly increased.
While interest rate spreads on new loans have increased significantly over the past year, the increase has been offset by a 2.5% decrease in the prime rate and a similar decrease in banker acceptance rates, which are the basis for many business loans.
The net result is a minimal impact to the effective interest rate paid by a private company with solid balance sheets, the report said.
Private companies should weather pending changes to lending practices given they are more conservatively financed than public companies.
Said Castonguay, "In recent months, there has been a notable thawing of the credit freeze, with many lenders exhibiting an increased appetite for new business. While activity has increased, lenders are taking a cautious approach to new accounts and we have seen a return to more conservative and traditional deal structures."