The Economic Impact of the Canada Small Business Financing Program

Working Paper

Vincent Chandler, Small Business Branch, Industry Canada

June 2010

Table of Contents

• I. Introduction
• II. Theory and Previous Evidence
• III. Data and Descriptive Statistics
• IV. Methodology
• V. Results
  • A) Growth Rates
  • B) Absolute Differences
• VI. Conclusion
• Bibliography

Acknowledgements

The author wishes to thank Allan Riding, Adele Deschamps, Derek Gowan, Katherine Clubine and Richard Archambault for helpful comments.

Abstract

This paper investigates the economic impact of the Canada Small Business Financing Program (CSBFP) by using the 2004 edition of the Survey on Financing of Small and Medium Enterprises. To avoid the usual self-selection problem associated with voluntary participation, the financing behaviour of the business and the intention to grow are used as control variables. Based on this analysis, the CSBFP would be responsible for the creation of 0.63 jobs per businesses participating in the program and for an increase of $78 352 in revenues. The results indicate there was no statistically significant impact on profits and salaries.

JEL Classification: G14, G21