Small businesses have long relied on banks as a primary source of financing and have now developed into an important segment of the commercial banking market. This article examines the relationship between these parties and the conflicts that may arise. Osler also evaluates the appropriateness and feasibility of the growing movement in Canada to use mediation to resolve small business disputes.
Banks have long provided financial and management assistance to small businesses. In today’s economy, they are increasingly turning to small businesses as an important and profitable customer segment. Banks are devoting more resources to the expansion of this market and are facilitating small-business growth and development. They are providing new services and are more cognizant of specific small-business needs and concerns.1
The relationship between banks and small businesses can give rise to conflict. Disputes create tremendous pressures within the business enterprise and often threatens its viability. Given the long-standing support provided by banks to small businesses, it is important to examine the nature of the relationship between these parties and assess the accompanying conflict.