Mr. Speaker, I am pleased to participate in this debate, especially as the fourth group is being considered, because I can speak of an amendment I made, which is supported by the Bloc Quebecois.
But I will not explain my amendment without responding to our colleague who has just spoken. I think we cannot say how important the small and medium businesses are to the creation of jobs and to economic development and yet not look at the difficulties they have getting financing. The Small Business Loans Act, as the auditor general pointed out, needed a tightening of accounting criteria. However, it works and its principles carry over to other sectors and to other credit requirements.
That is the aim of this part of the bill, which proposes—I would say even timidly—that pilot projects be set up to permit, among other things, what we in Quebec call social economics, that is, all the private projects that do not come from the co-operative sector, for example. The labour and other co-operatives sector live and develop in the private economy sector, but it has its own internal rules.
This part of the social economy formed by co-operatives includes businesses not trying for maximum profits, but to create jobs and provide services. Their objective being financial self-sufficiency, why would this sector not also have access to the government guarantee?
That is why I have no hesitation whatsoever in agreeing with this part of the bill. What I would like to see is to have another element added which would also be studied, in a pilot project, the operating capital fund. I shall explain.
Contrary to what the Reform members keep on saying about this bill, small and medium size businesses experience horrendous problems, particularly at time of setting up or of rapid expansion. They have enormous difficulty in obtaining credit. If the laws of the marketplace are the only things coming into play, they will not get any credit, or they will have to pay exorbitant rates reflecting the risk they represent.
At the industry committee we receive representatives of the major banks every three months, and they tell us that, when fledgling or rapidly expanding businesses are concerned, there is a risk. If there is no government guarantee, they tell us that this risk will have a very costly impact on small and medium size businesses and on economic development.
I support the pilot project aimed at making the government guarantee accessible to businesses in the social economy sector, but I would also like to see another dimension added, the financing of working capital.
In the studies that have been carried out for some time on the review of this act, a recommendation was looked at for guaranteeing working capital under certain conditions. No trace of this was evident in the bill itself, but it was discussed a great deal. Some people were really very much in favour of this, because when financing is insufficient to cover the company until there is some revenue coming in, the project can fail completely because no credit was given at a certain point. This is a serious problem.
Of course, people can say that other solutions will be found, that there will be funds from this or that source. In Quebec there are a few of these, but they do not cover all localities and all municipalities. This holds true even more in the rest of Canada than in Quebec. Why not include, therefore, in the pilot project a means of studying the conditions under which working capital could be guaranteed, for instance through management advice? There is nothing to prevent adding such advice to the regulations.
I tried an experiment and proposed to a number of Bloc Quebecois colleagues to follow my example and send a questionnaire to SMBs asking them if they were in favour of guarantees for working capital. One of the questions was “Do you think that if SMBs had more ready access to sufficient credit in hard times and to management advice there would be fewer bankruptcies and greater development?” The number of yes responses was astronomical, because this is their experience.
Often the credit lacking, plus the management advice, makes the difference between a business going bankrupt and weathering the storm and developing. It is the governments' responsibility to be aware of this.
Business people often start up without the necessary training and background, but once they have started and invested money they have accumulated for years—or money from their brother-in-law, and so on—there is no question of leaving them there saying “Too bad, they will learn a lesson going bankrupt`'. We have to be there with management advice and loan capability.
The rate of bankruptcies is too high, but there is no need for that. It could be different. For things to change, SMBs need help and not just to be left to the market. The market will allow the big businesses to come through.
Right now, public companies can get financing by selling stocks. They made the fortunes of people who bought stocks for a while. The situation is uncertain at the moment, and I know that in Great Britain there is concern about the American bubble, but that does not affect SMBs. They need accessible credit, a sort of a blood transfusion, in conditions that are not too difficult, with a dose of management advice.
I hope my colleagues opposite, since I do not think I can expect this from those beside me, will understand that it is easy to include working capital in the pilot project because it is a pilot project.
If this were possible, I think it would a very important plus for a number of businesses that would otherwise be facing an unhappy ending to their adventure. They lose everything, because at some point they lacked sufficient funding and management advice.
I really hope that this addition to the pilot project will mean progress in understanding the conditions in which businesses grow and develop rather than die.