Industry Committee on April 26th, 2022

[Brian Masse, NDP, Windsor West, ON]

I'd appreciate that.

Mr. Chair, maybe we can itemize some of these things. I know that at times we don't always get a response. I'm not suggesting that you would do that; it's just that we had a panel with a number of different studies before, and I'd really appreciate hearing about the science behind this one.

I know I'm running close to my time, but while I have you, I noted two items that were different—the women in technology venture fund and the Black innovation fund. How are those performing in a general sense? How are those two items, the women's entrepreneurship venture fund and the Black innovation fund, performing so far?

[Pierre Cléroux]

I don't have the details. My colleague Karen might have some. Otherwise, we can provide you with more information later.

[Karen Kastner, Vice-President, Partnerships and Government Relations, Business Development Bank of Canada]

Thank you.

The Black innovation fund was just launched, so we don't have any performance data quite yet. As you know, it is an investment fund, so there will be a period of investment and then a period of harvesting. We're still in the period of investment.

I believe you were also referring to the women in tech fund.

[Brian Masse, NDP, Windsor West, ON]

Yes, the venture fund.

[Karen Kastner]

On the venture fund, I don't have the exact numbers in front of me. We could definitely get them for you.

There has been a tremendous amount of interest. We've done a number of investments. Again, it has that kind of traditional investment and harvesting horizon. It's not like a loan; in the case of loans, you could see performance over a shorter period of time. We will have to wait a period of time to see how the fund as a whole performs.

We could certainly get you the data on the number of investments made and the value of those.

[Brian Masse, NDP, Windsor West, ON]

Even the application process would be important. I've met with different representatives at different times, and sometimes we don't always get the programs or they get lost. Those are just two things of interest that I'd love to share with constituents.

Thank you very much, Mr. Chair, and thank you to our witnesses.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

We have time for a second round of questions.

Mr. Généreux, you have the floor for five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being with us today.

Mr. Cléroux, you said you granted loans totalling $2.8 billion during the first wave of the pandemic. Regarding the $4.5 billion in indirect financial support, was that in loan guarantees?

[Pierre Cléroux]

Yes, it was loan guarantees requested by financial institutions. To make sure we were able to help the biggest possible number of small and medium enterprises, we granted direct and indirect loans to financial institutions.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I've been in business for 30 years, but I have unfortunately never had the pleasure of working with the BDC. However, I have worked with Economic Development Canada, or EDC, and with Investissement Québec, among other organizations. The reason why I have never knocked on your door is very simple: I always thought you were there for big businesses.

I get the impression that there has been a change of direction in the last few years at the BDC and that it is closer to small and medium businesses than it used to be.

Am I mistaken about that?

[Pierre Cléroux]

You're entirely correct. A large majority of our clients are small and medium enterprises in all economic sectors. For example, 30% of our portfolio is in the manufacturing sector, and the businesses in that sector employ from 50 to 100 employees.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

How much is the minimum loan that the BDC can grant?

[Pierre Cléroux]

The minimum loan is $100,000. In fact, today it is possible to get a $100,000 loan directly online.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You also said you didn't make grants. I know the EDC offers non-repayable financing, particularly for community-based projects. For private enterprises, the financing is repayable, but it comes with terms that often include a moratorium on interest or a very low interest rate for the first years.

Is it the same thing at the BDC?

[Pierre Cléroux]

In fact, we have different forms of financing and there can be all sorts of arrangements. The principle is that the financing always corresponds to the level of risk. Depending on the risk associated with the business's project, the cost of the loan will vary. That is why we say we are complementary in relation to the financial institutions. A business that is in very good financial health and can obtain financing from a private financial institution won't come to us, because our interest rate will be higher because of the risk.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Are your interest rates higher because you don't ask for security? Do you still ask for guarantees?

[Pierre Cléroux]

We ask for guarantees in some cases, but we ordinarily ask for them less than the private institutions. Certainly, we have greater flexibility when it comes to the loan, but we try to grant loans to businesses that have riskier projects so that we are complementary to the financial institutions.

With that said, we have granted a lot of loans jointly with a financial institution.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Were the loans granted during the pandemic that are part of the $2.8‑billion envelope all interest-free loans?

[Pierre Cléroux]

I don't think so.

I don't know, Karen, if you have more to comment on that. I don't think it was....

[Karen Kastner]

They were low interest, but there was interest, and there was also, as we typically have, a holiday on the principal repayment for the first year.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The same was true at EDC.

Mr. Cléroux, you spoke earlier about the new program announced recently having to do with technologies or the acquisition of new technologies.

What does the BDC consider to be new technologies?

[Pierre Cléroux]

I don't have the definition in front of me, but it is pretty broad. The objective is to help businesses adopt new technologies. The projects can be very simple, for example, setting up a website or making it transactional. They can also be complex, for example, automating a process in the manufacturing sector.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Lemire asked you a question earlier about regionalizing your institution. If I'm not mistaken, you have an office in Rimouski.

Is that possible?

[Pierre Cléroux]

Yes, we have an office there.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'm going back to what Mr. Deltell said, that he thought you did a lot of advertising. I imagine Ms. Hudon is the one who has brought this breath of fresh air to the BDC. You are much more active than before, that's obvious. I follow economic news, and that's what I've noticed.

To follow up on Mr. Lemire's question, could you provide us with the statistics you have on the amounts of the loans granted by region of Canada, or at least in Quebec?

It would be very worthwhile for us to be able to have them, since I don't get the impression that the BDC is as active in its loans as it is in its advertising. Of course, you have to advertise to make the institution known. It may be because I've never used your services, but I don't get the impression that you are very active in the rural areas of Quebec. I have always had the impression that the BDC was much more oriented toward big businesses than small ones.

Am I mistaken?