Mr. Speaker, I am pleased to talk about this issue because I have some background in the area of small business. For a year during the late eighties when the Peterson government was in power in Ontario, I had the privilege of being the small business advocate. I travelled around the province and met with small business people. They were men and women starting new small ventures, men and women working on family businesses that had been around for many years but still retained the category and the true definition of small business.
It is interesting that the Reform Party can speak against a small business loan program. This program has existed for 37 years. All parties that have formed a government in this place have supported it. They recognize the importance of the small business sector to real growth and job creation.
When you think about what happens when a loan is arranged under this program, there is truly a snowball effect that sees tremendous benefits not only in the private sector but also for governments at all levels because of the taxes that would be generated from a small business.
What happens when a small business makes an application under this act for a $200,000 loan? That loan cannot be for purposes of debt consolidation. It cannot be for anything where there is no security. It must be for items like real estate or equipment, leasehold improvements, things that are tied directly to the business and that have some asset value.
At the same time, the business person involved in applying for this loan must go through a business plan with the bank. This is not a slam dunk by any stretch of the imagination. The bank will take your business plan into account when it decides whether to approve the loan. The process of filing the business plan alone will help to ensure your business is a success.
With the $200,000 loan the small business will acquire assets. Those assets are in many cases manufactured by other small businesses. There is a snowball effect when a purchase is made for equipment or whatever is needed to assist the small business. This gives business to the producing companies which allows for job creation and the people who work for the producing companies pay taxes.
It is interesting that Reform would try to paint this as a subsidy. If we add up the benefits that the various levels of government would receive for one transaction, it would be quite enormous. Government would benefit from the income tax paid by employees of the producing companies that supply the small business. It would also benefit from the income tax paid by employees of those small businesses. That does not sound like a subsidy to me, especially when we consider that the default level is under 5% for a very strong program with a lot of uptake across Canada.
Think about the benefits to women entrepreneurs. Historically, women, young people and others just starting out get caught in the catch-22 that they do not have the necessary personal assets to qualify for bank loans. We all know how the banks operate. They will lend you money only when you do not need it. This bill says to the banks that we will put in place a business plan that will help the small business entrepreneur, be it a young person, a woman starting a new business or a family starting a new business. We will make sure they have all the data they need.
It is interesting to hear the Conservative Party talk about reducing the size of the loan. Currently the level is $250,000. The average loan is $65,000. In starting a new business with any kind of substantive investment I suggest that $250,000 as a capital investment in the infrastructure of that new business is not a substantial amount of money.
If someone wants to start a business they have to buy equipment. Perhaps it is a trucking business. Perhaps it is a restaurant which requires refrigeration equipment. They do not buy this kind of equipment for $20,000, $30,000 or $50,000. It is highly capital intensive.
In my role as the small business advocate, when I travelled around the province, we asked business people what some of their biggest problems and concerns were. The first one—