Mr. Speaker, I am delighted to speak to Bill C-53, an act to increase the availability of financing for the establishment, expansion, modernization and improvement of small businesses.
The small business financing act is an extension of the Small Business Loans Act which was passed in 1961. It builds on the government's commitment to provide small businesses with better access to financing by guaranteeing loans made by lenders to small and medium size businesses across Canada. Small businesses play an important role in Canada's economy. Canada has more than 2.5 million small businesses. In 1996-97 small businesses created 81% of new jobs in the economy.
In my riding of Etobicoke—Lakeshore there are over 3,600 small and medium size enterprises. They are an integral part of the economic infrastructure of Etobicoke—Lakeshore. The operation of these businesses cuts across the manufacturing and service sectors of the economy. They are the main engines of employment in my riding and elsewhere in Canada. Maintaining a strong and vibrant economy is vital to the economic success of our country.
As parliamentarians we must support measures that would facilitate economic growth in Canada. I support the small business financing act because I know that providing opportunities to companies through financing or technology will give the Canadian economy the energy it needs to grow. This sector of the Canadian economy has proven to benefit many Canadians. It is necessary to take the steps that would enable it to become healthier, to expand and to become more profitable.
Bill C-53 will ensure that small businesses will continue to be of benefit to all communities across Canada. Through successive prebudget consultations and town hall meetings with small business owners on job strategy and economic growth I heard from my constituents about the difficulties faced by small businesses in obtaining financing for start-up capital from banks and other lending institutions. The small business financing act, as the Small Business Loans Act, will continue to address this problem.
Since 1961 the Small Business Loans Act has provided over $22 billion worth of debt financing through lending institutions. As many as 30,000 lending firms serve clients that are small and young businesses with an average loan size of $68,000.
It is not an understatement to say that small companies need financial assistance from the government. Despite the availability of capital and increases in lending, access to credit continues to be identified by entrepreneurs as a major obstacle to the growth of small businesses. I am pleased to see that the government will continue its commitment to providing finances to small and medium size business communities through the small business financing act.
In times of economic downturn we know small businesses are the most vulnerable. In my riding during the recession of the late 1980s and early 1990s many small businesses folded as a result of the cyclical downturn in the economy. Many companies did not have the financial resources to wait or to ride out the recession.
The Canada small business financing act is about creating stability for small and medium size businesses. It will put many small and medium size businesses on a sound, stable footing to better cope and manage under financial stress and, in particular, during times of economic downturn.
This bill was put before the House after extensive consultations with public and private stakeholders. The Minister of Industry has also taken into account the recommendations of the Standing Committee on Public Accounts and the auditor general.
Under the act the small business financing program will extend loans to lenders for terms of up to 10 years. Lenders must pay a one time 2% fee in addition to an annual registration fee of 1.25%.
There are so many things to say about the benefits that this will ensure to my constituents of Etobicoke—Lakeshore. Suffice it to say that micro and very small businesses will benefit from Bill C-53.
In examining the issue of cost recovery and the key areas of the bill I call on my colleagues on all sides of the House to give support to Bill C-53. It is a very important bill and the issues it covers would do much for the businesses in our various and varying communities.
In closing, Canada's small business loans program is one of the best programs of all the OECD countries. It is a very crucial segment of our economy and Canadians have come to depend on it for their economic livelihood. I encourage all of my colleagues, keeping in mind the micro and small businesses in the various and varying constituencies, to give support to the bill.