Thank you for inviting me. I'm grateful for the opportunity to be here today.
I'm grateful for the opportunity to be here.
Part of your motion refers to access to credit for businesses. BDC can speak to this topic with a great deal of knowledge, and I am happy to do so. To begin, a quick reminder of BDC's three main activities: financing (term lending and subordinated financing), consulting and venture capital. While consulting is key to developing the skills of Canadian entrepreneurs, and venture capital is crucial to commercializing Canadian technology, I'll focus my remarks on business financing.
Through our 100 branches across the country, we have 1,800 people providing financing to businesses. Through our lending portfolio, which stands at close to $12 billion, we support 28,000 entrepreneurs. These clients in turn generate about $160 billion in sales, including about $22 billion of export sales.
Moreover, we have about 3% of the term lending market. This makes us small compared to other financial institutions. Our 100-branch network is modest compared to the 6,600-plus branches of Canada's 6 big banks. We have 600 account managers who speak to thousands of entrepreneurs every month, and this gives us a good feel for the pulse of the market.
Right now, we see two forces at work.
The first force is the recession. A great many entrepreneurs are hesitating to start new projects; entrepreneurs are delaying until they have a clearer sense of what the marketplace holds in store. As a result, we see a lower than normal number of entrepreneurs wishing to finance projects, and our pipeline of potential deals is shrinking.
The second force, on the other hand, is tightened credit conditions. This is the result of several factors: the exit from the marketplace of some non-deposit-taking institutions, the substantial reduction in the securitization market, a difficult bond market, and the difficulty for financial institutions of lending in an uncertain economic environment. So more entrepreneurs are coming to us for help than in normal times, and we are lending more. We will have authorized more than $3 billion in new loans this fiscal year, ending this month. One-third of the loans are going to the manufacturing sector. We're also seeing a much greater number of mid-size firms approaching us; transactions of over $5 million have increased 50% year over year.
Now, our branch employees are talking to their counterparts at other financial institutions more than ever before. In the first ten months of this year there were 15,000 contacts, compared with about 9,000 for all of last fiscal year. And these conversations have produced more than 1,200 referrals this year. So we are working to help as many entrepreneurs as we can; that's our role in good times and bad.
You'll recall that in November 2008 the government granted us a $350 million capital injection. We've thus far received $250 million, which we've already put to good use in the financing marketplace. We expect the other $100 million in April, and we'll use it for a new line of credit guarantee, which we're developing in consultation with financial institutions.
Now, the budget bill before Parliament contains two initiatives that involve BDC. The first is the business credit availability program, known as BCAP. It's a collective effort of Canada's big banks, EDC, and us to ensure that at least $5 billion in loan and credit support is made available to creditworthy businesses whose access to financing would otherwise be restricted. Representatives from all organizations have already begun to meet at senior and working committee levels to determine the best ways of doing so.
For large corporate clients, we'll start participating in syndicates to replace departing lenders. For mid-market-sized loans, financial institutions will share in an increasing number of commercial mortgage deals on a pari passu basis with us. For smaller deals where pari passu might be inefficient or costly, we will purchase participation in commercial mortgages.
I mentioned earlier that we're putting in place a line of credit guarantee program, the fourth thing we're working on. And, finally, we're exploring with some institutions a way to deal more quickly with small loans that would get declined as a result of those institutions' scoring systems.
So there's a lot happening. Collaboration with EDC and the banks is good, and we're seeing constructive partnerships being developed.
Now, I am aware that some people think that BDC is not acting fast enough or even lending enough. It's important for you to know that the people who work with me at BDC do so because they are motivated by our mandate to help entrepreneurs, and this motivation is why they, like me, join and stay at BDC. We're striving to help as many entrepreneurs as we can. But it's also crucial to remember that we are a commercial crown corporation, a bank, with a statutory obligation to do deals where there is a reasonable chance of success. What this means, unfortunately, is that we cannot help everyone who asks. I can assure you that every approach for financing gets a detailed review. Every entrepreneur who approaches us is given a chance to present their case. We want to help, and we understand the need for speed, but our commitment and desire to help come with parameters and responsibility, and we must seek creditworthy clients and commercially viable projects.
The budget also calls for the creation of a Canadian credit-secured facility to support the financing of vehicles and equipment for businesses and consumers—a very important initiative. We're working on this with Finance Canada, who are here this morning. We've put the consultation document on our website, and I've brought some paper copies if you'd like to review them.
We have started the public consultations and we've met with important stakeholders. We believe that we will finish the consultations early next week and then start drafting an action plan. As with the BCAP program, we are striving to launch this as quickly as possible, but financial facilities like this one, which may go up to $12 billion, are not created in a day. We're very aware of our responsibility to protect taxpayers' money.
In conclusion, no one at BDC, from our board members down to our front-line account managers, underestimates the gravity of the recession or the strain it's placing on business owners. All of us want to support them quickly, professionally, and well. Please know that we're doing everything within our power and means to do so.
Thank you for your time, I would be pleased to answer your questions.