Co-ops most likely to seek loans from credit unions, StatsCan survey shows
 
December 5, 2008
 
When a co-operative needs to borrow money, it is most likely to turn to a credit union, a new Statistics Canada survey shows.

The study found 71 per cent of the co-operatives that requested new or additional loans, lines of credit, or credit cards in the past 12 months made their request to a credit union or caisse populaire.

The survey also suggests credit unions are more likely than banks to approve those requests.

Rural co-operatives were most likely to seek financing from a credit union – 74 per cent – compared to 64 per cent of urban-based co-operatives.

However, the study found that loans sought from banks were much larger than those requested from credit unions -- $3.7 million compared to $513,000.

In most cases,  the full amount requested was authorized -- 89 per cent of the time for credit unions and 85 per cent for banks.

The survey found that 35 per cent of co-operatives had applied for financing over the past 12 months.

In a news release, the Canadian Co-operative Association noted that one-fifth of the co-operatives indicated that trying to obtain financing was a serious obstacle to growth and called on the federal government and financial institutions to increase their investment in this sector.

The most common reason for co-operatives to seek financing was to acquire additional working or operating capital. The second most common reason was to purchase additional machinery and equipment.

StatsCan's report on the survey is available here.