(i) The Business Development Bank of Canada, BDC, provides commercial financing to small businesses. Requests for financing are examined based on established commercial credit criteria. As a term lender and provider of venture capital the bank assesses not only the project but also the long term viability of the business. The Bank carefully assesses the viability of the project by reviewing the management, the potential profitability, shareholder's investment and available security. The instruments and/or policies used to scrutinize the information submitted by applicants for financial assistance as to its accuracy are described as follows.
The bank has a comprehensive due dilligence process in place to assess eligibilty, environment, credit worthiness and viability of the project, proposal or business. This includes verification requirements with the applicant's principal chartered bank, any other financial institution and/or government agencies dealing with the applicant, principal suppliers and clients, chartered accountants and various credit associations to verify information. In some cases external industry specialist assistance is obtained.
(1) It is mandatory to obtain credit bureau reports. Dun & Bradstreet reports are requested depending on size and complexity of the operation.
(2) It is mandatory to obtain chartered bank-credit union reports on every applicant at time of initial inquiry. It is also a requirement to contact any other lenders, including leasing, to obtain experience information and confirmation.
(3) It is mandatory to complete a management assessment and market evaluation through a series of questions and outside verifications with commercial lenders, trade suppliers and industry experts.
(4) It is mandatory to undertake a complete financial analysis, both horizontal and vertical, supported by discussions with the applicants accountant-auditor. The bank emphasizes requirements for audited financial data. However review engagements are acceptable for smaller less complex proposals.
(5) It is mandatory to assess the environmental conditions of the grounds and facilities.
(6) All pertinent information is entered into a risk grid and compared to industry norms to determine the overall level of risk.
In addition, a second level approval process is in place for larger applications that includes a thorough review of all supporting information gathered by the processing office in the due diligence process. This is similar to processes conducted by other commercial lending institutions in North America.
(ii) BDC does not provide grants or subsidies. It provides debt and equity financing which must be repaid, including both capital and interest. All the money lent by BDC to small business is borrowed from international and domestic financial markets. In order to meet the operating needs of its loan clients, the bank provides flexible repayment terms, including seasonal payments if required.
(iii) For its administrative purposes the BDC maintains activity reports on a branch by branch basis. The BDC does not maintain statistics on the basis of electoral ridings and is therefore unable to provide the listing as requested. BDC is, however, providing statistics relating to loan activity of the BDC on the basis of branch. Branches may service more than one riding. The following are the loans and guarantees authorized for the fiscal year ending March 31, 1998, by branches which include in their territories the requested rindings:
The Scarborough branch, which includes the riding of Markham, authorized 53 loans for a total of $25.1 million; the Saint John, N.B., branch which includes the riding of Saint John, authorized 44 loans for $7.2 million; the Calgary branch , which includes Calgary Southwest, authorized 198 loans for $36.5 million; the Halifax Branch, which includes the riding of Halifax, authorized 81 loans for a total of $22.6 million, the De Maisonneuve branch, which includes the riding of Laurier—Ste-Marie, authorized 74 loans for a total of $26.3 million; the Trois-Rivières branch, which includes the riding of Saint-Maurice, authorized 68 loans for a total of $16.1 million; the Ottawa branch, which includes the riding of Ottawa South, authorized 114 loans for a total of $33.3 million; and Place Ville Marie Montreal branch, which includes the riding of Lasalle—Émard authorized 221 loans for $55.1 million.
(iv) For the provinces requested the following are the loans and guarantees authorized for the year ending March 31, 1998. In the province of Quebec there were 1,807 loans authorized for a total of $477.4 million. In Ontario there were 1,291 loans authorized for a total of $388.3 million. In Alberta there were 693 loans authorized for $98.2 million. In Nova Scotia there were 118 loans authorized for $29.4 million and in New Brunswick there were 227 loans authorized for $47.4 million.
(v) (a) The Techno-net loan was recently launched. Therefore it is too early to report activities under this product.
For the fiscal year ending March 31, 1998: (b) 515 loans for $18 million were authorized under the micro business program; (c) 46 patient capital loans for $9.4 million were authorized; (d) term loans which include products such as the micro business program, the young entrepreneur financing program and the tourism investment fund consisted of 5,759 loans for a total of $1.2 billion for the year; (e) 215 venture loans for $77.6 million were authorized; (f) 231 working capital for growth loans were authorized for a total of $18.5 million; (g) 16 working capital for exporters loans were authorized for a total of $3.3 million; (h) 27 loans for $31.8 million were authorized under the tourism investment fund program; (i) 158 loans for $4.1 million were authorized under the young entrepreneur financing program; and (j) 59 aboriginal business loans were authorized for $12.2 million.
Question No. 232—