Mr. Speaker, I am delighted to rise today to speak to Motions Nos. 6 and 11.
I have heard a lot of inaccurate information coming from members of the Reform Party. It truly shows that they have a lack of understanding of what the Small Business Loans Act is.
I would assume that any financial institution would do proper due diligence on any person applying for a small business loan.
I heard somebody say that the loss is 10 times higher than it is in the private sector. That is not true. It is about double. The private sector has a loss of about 3.7% on its loans, and the average is 6%. I cannot see how that is 10 times higher.
There is also the 50% proposal. Reform members assume that it is 50% of all losses. It is not. If it is a financial institution and it has an accumulated loan portfolio of $100 million, it is 90% on the first $250,000, 50% on the next $250,000, and for any losses over and above that it is 10%.
They are saying there is going to be a huge amount of losses. That is not true. I have trouble understanding their logic.
Most small businesses would prefer to get their loans from financial institutions because to get small business loans they have to pay interest which is 3% above prime and another 1.5% in administrative fees. It is unfortunate that these people cannot get their loans from financial institutions, but they help to create a lot of jobs. Over the life of the Small Business Loans Act several hundred thousand jobs have been created. A lot of businesses have grown bigger and they will create a lot more jobs in the future.
Motion No. 11 concerns the 21 day notice period. A financial institution may have many loans across many of its branches. When it is given notice of an audit it takes a few days to collect the information. That is the reason the committee supported 21 days for the notice.
My party will not be supporting these two motions.