21 October 2009
Ottawa, Ontario
The Government has taken significant steps to mitigate the impact of the global credit crunch and ensure access to financing for small businesses by:
- Providing an additional $350 million in capital to both the Export Development Corporation (EDC) and the Business Development Bank of Canada (BDC) so they can provide additional support to Canadian businesses.
- Creating the Business Credit Availability Program (BCAP) to improve access to financing for credit-worthy businesses, enhancing co-operation between private-sector financial institutions and the Government’s financial Crown corporations. EDC and BDC are working to provide at least $5 billion in additional direct lending and other types of support.
- Allocating over $1 billion under the Canadian Secured Credit Facility to buy asset-backed securities originated by smaller vehicle and equipment companies under the Small Enterprise Tranche.
- Enhancing EDC’s existing Export Guarantee Program to increase the guarantee coverage from 75 to 90 percent for loans up to $500,000, benefiting small and medium-sized enterprises (SMEs).
- Expanding EDC’s mandate to allow the Corporation to provide financing and insurance in the domestic market for a temporary period.
- Providing $161 million in capital to BDC so it can expand higher risk lending through a new Working Capital Support program.
- Providing an additional $350 million over three years in funding for BDC’s venture capital activities to allow it to make additional direct investments in technology companies and invest in private, independent Canadian venture capital funds. This funding is in addition to the $75 million allocated in Budget 2008 to BDC to support the creation of a late-stage venture capital fund and the $50 million for venture capital activities in Southern Ontario as part of transitional programming for the Federal Economic Development Agency for Southern Ontario.
- Increasing the maximum eligible loan amount a small business can access under the Canada Small Business Financing Program from $250,000 to $350,000, as well as $500,000 for loans made for acquiring real property.
- Providing $10 million to the Canadian Youth Business Foundation to support and mentor young Canadians who are creating new businesses.
- Providing the National Research Council’s Industrial Research Assistance Program with an additional $200 million over two years to temporarily expand its initiatives for technology-based SMEs and contribute to an innovation-led economic recovery. This includes $170 million for contributions to firms, and $30 million to help companies hire over 1000 new post-secondary graduates in business and science over the next two years.
Since taking office, the Government has provided tax relief measures to help SMEs invest more earnings in development and expansion, helping to create more jobs. Canada’s Economic Action Plan has raised the amount of business income eligible for the small business tax rate of 11 percent to $500 000 from $400 000 while Employment Insurance premium rates will remain frozen at the 2009 levels. The Government has also increased the taxable income range for the higher 35 per cent scientific research and experimental development (SR&ED) rate; the enhanced SR&ED rate is now phased out over the $500,000 to $800,000 range.
