Good afternoon, everyone. Bonjour.
On behalf of my colleagues at BDC, thanks for the invitation to join you today.
Naturally, we are pleased to contribute to your deliberations.
I would like to share with you BDC's observations on the challenges that small and medium-sized business entrepreneurs are facing. I will then share with you what we see in our portfolio of entrepreneur clients across Canada, as well as what they are telling us. To stay focused on the mainstream economy, I will not specifically address the situation of the technology-based businesses in which we invest as part of our venture capital program, but I will be happy to respond to any questions you may have.
Generally, Canada's small business entrepreneurs have shown real resilience over the past months, but they're not out of the woods yet. They're still under stress, and I think the next 12 months will be critical.
BDC provides over $13 billion in financing and venture capital, as well as consulting services, to in excess of 28,000 clients. We seek to build long-term supportive relationships with our clients. We have clients in most sectors of the economy and certainly in all parts of the country. We therefore believe that our portfolio, generally speaking, reflects the financing market for small and medium-sized enterprises, known as SMEs.
Our portfolio has changed since the start of the credit crisis and recession, and that's because in our role as Canada's development bank we have increased our lending to record levels. In the first six months of this fiscal year our lending went up by 54%. A large share of the new lending has flowed from our participation in the federal government's best business credit availability program that Mr. Campbell was talking about, known as BCAP.
Through BCAP, BDC is working with EDC and the private sector financial institutions to improve access to credit. Between February and October we provided $1.9 billion in financing to businesses under BCAP. I want to take this opportunity to acknowledge the fact that this increase in lending was achieved as a result of great cooperation between the financial institutions and ourselves.
We've always accepted more risk than private sector banks, and that's our role. But over the last year we've increased our support for entrepreneurs' high-risk projects. Our volume of high-risk transactions has increased by 60% compared to last year.
When we examine our portfolio for indications of how our clients are doing, we see very concrete signs of the continuing stress I referred to earlier. Let me give you some examples. The delinquency rate--the percentage of clients who've fallen more than one month in arrears--has reached a new peak. The percentage of clients whose files have been downgraded to “impaired”--generally defined as clients who've missed three consecutive payments--rose to its highest point this year in October.
There are other more subtle indications of pressure on businesses. The proportion of loans going to new clients is higher than usual, and I think this can be attributed to the difficulty they're having in obtaining credit elsewhere. Many entrepreneurs shop around when looking for credit. This means that a relatively stable percentage of potential clients--entrepreneurs to whom we have offered loans--say no and cancel their applications, usually because they've found less expensive alternatives. This cancellation rate is now the lowest it's ever been, which indicates to us that entrepreneurs require the close cooperation that we and the private sector financial institutions have fostered during these difficult months.
Let me turn to what our clients are telling us. They talk to us in two ways: through regular conversations with our employees across the country and through regular surveys. Our clients tell us that their top challenges are the general health of the economy and their competitive position in the marketplace.
An important sign of optimism is that three out of every four of our clients have investment plans they're considering moving forward, which is significant. A full 74% plan to make capital investments in the next 18 months, and that is a very hopeful development for the future.
To sum up, we're seeing both negative and positive signals from our clients. On the negative side of the ledger, we're seeing continuing signs of stress in our delinquency rates. We're seeing indications that many businesses have to search to get the credit they need. On the positive side, entrepreneurs are showing growing optimism and strong intentions to invest in their businesses in the coming months.
We at BDC are cautiously hopeful about the speed of the recovery, but we also believe we're coming to a critical juncture. We need to see more entrepreneurs turn their optimism and good intentions into action. That's what Canada needs now to accelerate the recovery. Regardless of where we are in the economic cycle, Canada's future prosperity depends in large part on risk-taking, hardworking entrepreneurs. We need them to create a greater number of adaptable, globally competitive companies.
In closing, BDC is here to support them, always in cooperation with other financial institutions. As you saw in the Statistics Canada study, which my colleague, Jérôme Nycz, forwarded to you this summer, the results speak for themselves: BDC clients generated more revenue, added more employees, and survived longer than other businesses. When clients combined our consulting offering with our financing, the results were even stronger.
We're proud of the difference we make to SMEs.
We'll happily answer questions you have. Thank you.