Madam Speaker, I rise today to support Bill C-53, particularly because it improves existing loan guarantee programs that effectively stimulate economic growth. It helps to create jobs through small businesses. It encourages the kind of economic activity and entrepreneurial qualities among Canadians that can ensure our prosperity in the coming century.
There is no question that the proposed Canada Small Business Act would continue the existing act's history. That act's history over the last 37 years has been to support innovation. It has been there to support risk taking, a significant element of the government's investment for Canada's future. Most important, it is meeting the demonstrated needs of our small business community throughout Canada.
For example, the Canadian Federation of Independent Business released its survey of small businesses this past January, “Credit where credit is due”. Nearly 30% of the business owners who were surveyed listed availability of credit among their most serious business concerns. They need financing for buying and modernizing their equipment, for renovating, for purchasing premises and for buying land.
Two kinds of businesses face especially difficult problems in securing financing. These are very small and very young firms. It happens that these are also the financing gaps that the current act has been especially designed to help.
On the issue of size, nearly three-quarters of the firms taking out a loan guaranteed by the existing act have fewer than five employees, far more than regular bank borrowers who are of the same size.
On the question of the age of firms, the difference is even more striking. It is important to note that almost 38% of small businesses with a loan guarantee under the act are less than one year old. By contrast, among small businesses with ordinary financing from banks only 5% are younger than one year.
It is important to note that last year over 60% of loans under the act went to firms that had been in business for three years or less. The entrepreneurs who start these small firms and the spirit that drives them and moves them to succeed are Canada's economic hope for the future.
Small and medium businesses are the anchor of our national economy. They made crucial contributions to our collective economic well-being over the years. This is an important reason why we should be supporting the bill.
Even giant multinationals started in a niche market, and some quite literally in the corner of a garage. I can point out that Magna International started in Richmond Hill over 30 years ago. Today Magna International is one of the leading, if not leading, international automotive part manufacturers in the world. That environment is exactly what is proposed in the bill to help create those kinds of opportunities. Small business people need the federal government to appreciate and encourage entrepreneurial spirit, the willingness to take risk, which has been the hallmark of our country.
Canada needs over 2.5 million small businesses and self-employed entrepreneurs. They account for approximately 40% of the gross national product. Small businesses are responsible for the overwhelming portion of new jobs, 70% to 80% over the past three years.
The loan guarantee program is more than an investment in small businesses. It is an investment in jobs and an investment in job opportunities. We have to do more than talk about it. We have to provide those opportunities. We have to be able to act. The bill addresses those issues. In the last year alone borrowers expected to create an additional 74,600 jobs as a direct result of the loans. That represents more than 2.5 jobs per loan in just one year.
During the last five years borrowers anticipated creating over 480,000 jobs. We consider that the average loan guaranteed last year was approximately $68,000 and that the loan guarantee program is moving toward cost recovery. This is a remarkably cost effective way of expanding the nation's economy.
Governments, financial institutions and private lenders will certainly continue to come up with new ideas and plans for financing small business, innovative services, products and delivery channels. However it is important to note that none of them is primarily targeted to the young, small firms.