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Annual Report 2010-2011

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Contents

Annual Report 2010-2011

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The Canada Small Business Financing (CSBF) Program aims to increase the availability of financing to small businesses by extending financing that would otherwise have been unavailable to them or available only under less attractive conditions. It is a national program operating in all provinces and territories. Financial institutions make term loans of up to $500 000 to small businesses to purchase or improve real property, equipment or leasehold improvements. The Government of Canada pays lenders 85 percent of the eligible losses incurred on defaulted loans.

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IC 60923

Annual Report 2010-2011

Minister's Message

Minister of Industry
Canadian Coat of arms

Ottawa, Canada  K1A 0H5

Ministre de l'Industrie

I am pleased to present to Parliament the Canada Small Business Financing (CSBF) Program's annual report for 2010-11 pursuant to section 20 of the Canada Small Business Financing Act.

The Government of Canada recognized 2011 as the Year of the Entrepreneur, highlighting the essential role small businesses play in job creation, generating wealth in the Canadian economy and securing Canada's ongoing economic recovery.

Since 1961, the CSBF Program and its predecessor, the Small Business Loans Program, have contributed to Canada's economy and have remained relevant to the needs of small businesses by increasing the availability of financing for their establishment, expansion, modernization and improvement.

In 2010-11 the CSBF Program registered over 7400 loans worth more than $1 billion made by financial institutions to small businesses. Fifty-seven percent of the loan values were made to small businesses that were in operation for less than one year, fulfilling an important aspect of the program by extending financing that would have otherwise been unavailable.

The Canada Small Business Financing Program is an important part of our support for Canadian small businesses.

space to insert signature
Christian Paradis

Annual Report 2010-2011

Program Snapshots 2010-11

Loans to small businesses
totalled 7466 with a value of almost $1.03 billion. The average loan size was $137 521.
Loans for amounts of more than $250 000
accounted for 40 percent ($405.7 million) of the total value of loans registered.
Businesses in operation less than one year
borrowed approximately 57 percent ($588 million) of the total loan value.
Corporations
were the preferred method of carrying on business, accounting for 91 percent ($930.8 million) of the total loan value.
The largest industry sector
using the CSBF Program was accommodation and food services with 27 percent ($281.4 million) of the total loan value.
The amount of claims paid to lenders
declined to $80.4 million (1579 claims) averaging $50 924 per claim.
Businesses with less than $1 million in revenues
accounted for 73 percent ($752.8 million) of the value of all loans registered.
The CSBF Program's
261 884 website visits illustrate the high level of interest in access to financing.

Annual Report 2010-2011

1. Overview of the Canada Small Business Financing Program

The purpose of the Canada Small Business Financing (CSBF) Program is to help small businesses obtain access to financing that they may otherwise have difficulty in obtaining. By sharing the burden of risk on loans, the Government of Canada and private sector lenders are able to increase the amount of financing extended to small businesses.

Nature of the Program

Loans under the CSBF Program are available for the financing of real property, equipment and leasehold improvements. The assets financed must be used to carry on business in Canada. The program facilitates loans made by lenders to small businesses of up to $500 000 (of which a maximum of $350 000 can be used to finance the purchase of equipment and leasehold improvements). A loan registered under the program must satisfy certain requirements (see Section 2 "Program Requirements").

The Role of the Federal Government

Industry Canada administers the CSBF Program by registering loans, collecting fees and paying lenders eligible portions of losses on defaulted loans. Industry Canada, however, does not approve the borrower loan applications and is not involved in the administration of the loans. By registering loans with the CSBF Program, lenders are entitled to submit claims to Industry Canada in the event of default.

The Role of Lenders

Lenders include chartered banks, credit unions and Caisses populaires. These lenders provide service to Canadians in all provinces and territories.

Lenders are responsible for all credit decisions, approving the loans, disbursing the loan proceeds, registering the loans with the CSBF Program, administering the loans and, in the event of default, realizing on the security and the guarantees. Each lender establishes its own lending criteria subject to the requirements of the CSBF Program. Once the loan is approved, the funds that are advanced to the borrower are the funds of the lender and not the government.

How Lenders Are Compensated on Defaulted Loans

When a loan is in default, the lender must realize all security taken for the loan before forwarding its claim for loss to the CSBF Program, together with all the necessary documentation to justify the claim. Once the lender's information is reviewed and the claim is approved, the lender is paid 85 percent of its eligible loss. The claim can be adjusted or rejected if there is non-compliance with program requirements.

Incrementality

The CSBF Program aims to increase the availability of financing for small businesses. It extends financing that would have otherwise been unavailable, or would have only been available under less favourable terms (higher interest rates, greater collateral requirements, etc.). This is referred to as incrementality. A 2009 study, Canada Small Business Financing Program: Updated Analysis of Incrementality, found that 80 to 85 percent of the loans made under the CSBF Program were financially incremental.

New businesses and start-ups often lack a credit history and the collateral needed to secure a loan. As a result, they have difficulty in accessing capital. An indicator of incrementality is the number of start-ups and new businesses that receive loans. In 2010-11, these businesses borrowed on average 57 percent of the total loan value, another strong indicator that the program is achieving incrementality.

Job Creation

In 2010-11, borrowers estimated that loans created a total of 18,697 new jobs (2.5 jobs per loan) for their businesses. These job estimates are provided by borrowers on the loan registration form. However, these estimates have been found to vary significantly compared to actual job hirings related to CSBF loans. As such, some caution is necessary in deriving conclusions from these job estimates. Nevertheless, a 2009 report, Study of the Economic Costs and Benefits of the Canada Small Business Financing Program, found that small businesses that obtained loans under the CSBF Program had higher employment growth than non-CSBF firms, created more jobs and retained more employees than those that did not use the CSBF Program.

Annual Report 2010-2011

2. Program Requirements

The CSBF Program operates according to the following major requirements:

Small business eligibility: The businesses must be for-profit, carried on in Canada and have annual gross revenues of $5 million or less. Farming businesses and charitable or religious institutions are not eligible.

Assets financed: Loans under the CSBF Program must be used to finance the purchase or improvement of real property or equipment, the purchase of leasehold improvements or the financing of program registration fees.

Maximum financing amount: A borrower cannot have more than $500,000 (of which a maximum of $350,000 can be used to finance the purchase or improvement of equipment or leasehold improvements) in total loans outstanding under the CSBF Program.

Percentage of assets financed: The maximum amount of financing available is 90 percent of the eligible cost of the assets.

Maximum interest rate:

  • Floating rate: the maximum is the lender's prime rate plus 3 percent (includes the 1.25-percent administration fee).
  • Fixed rate: the maximum is the lender's single family residential mortgage rate plus 3 percent (includes the 1.25-percent administration fee).

Length of term: The maximum term for any loan is 10 years from the date the first payment of principal and interest is scheduled to be made.

Fees:

  • A fee of 2 percent of the amount financed is paid at the time of registration. This fee can be included in the CSBF loan.
  • An annual administration fee of 1.25 percent is paid on outstanding loan amounts. This fee may be included as part of the interest rate charged on loans.

Loss-sharing ratio: Eligible losses on loans are shared as follows: 85 percent government and 15 percent lender.

Cap on claims: For each five-year period commencing April 1, 1999, the Government of Canada's obligation to an individual lender is to pay eligible claims (i.e., 85 percent of the eligible losses) on defaulted loans up to a maximum of the aggregate of:

  • 90 percent of the first $250,000 in loans registered; plus
  • 50 percent of the next $250,000; plus
  • 12 percent of all loans in excess of $500,000 for loans made on or after April 1, 2009
    (10 percent for loans made before April 1, 2009).

Annual Report 2010–2011

3. Program Performance Analysis

3.1 Program Activity

The Small Business Financing Directorate (the Directorate) administers the CSBF Program. During 2010–11, the Directorate received 3911 inquiries from small businesses and lenders through the CSBF Program's info-line and website. As one of Industry Canada's most visited sites, the program's website received 261 884 visits. The program's pamphlet, Lending a hand to your business, had a distribution of more than 86 000 copies. A variety of outreach activities were conducted throughout Canada in order to increase awareness of the CSBF Program among small businesses, lenders and business support organizations.

3.2 Lending and Claim Volumes

Loans

During 2010–11, the value of loans registered by private sector lenders under the CSBF Program was almost $1.03 billion, an increase of approximately $74 million (7.7 percent) from last year (see Figure 1A). This is the highest value of loans since 2006–07. There was a decrease of 68 (less than 1 percent) in the number of loans to 7 466. However, the average loan size grew by 8.7 percent to $137 521. The increase in the overall loan value and in the average loan amount is due in part to the increase in the maximum loan amount from $250,000 to $500,000, which came into effect on April 1, 2009 (see Section 3.4 "Lending and Claims by Size of Loans"). Since 1999, the CSBF Program has registered 128,800 loans worth over $12.3 billion.

Figure 1A: Number and Value of Canada Small Business Financing Loans, 1999-2011
Figure 1A: Number and Value of Canada Small Business Financing Loans, 1999-2011
Description of Figure

This vertical bar graph compares the total number of loans and the total value in millions of dollars of Canada Small Business Financing loans from 1999–2000 to 2010–2011. The highest number of loans was during 1999–2000, which had 17 741 loans, followed by 14 442 loans in 2000–2001. For the years ranging from 2001–2002 to 2005–2006, the number of loans stayed around 11 000 loans. In 2006–2007, the total number of loans declined to 9595 and steadily declined to 7466 in 2010–2011. The value of loans was highest in 1999–2000 at 1.3 billion dollars, followed by about 1.1 billion dollars in 2000–2001. After that time, up until 2010–2011, the value of loans stayed about the same and ranged between just under 1 billion dollars to just over 1 billion dollars, with the lowest amount in 2008–2009 at 901 million dollars. In 2010–2011 the value of loans was 1.03 billion dollars.

For more details, see the Appendix, Table 1.

Claims

The claims paid in 2010–11 were associated with loans registered during the period of 1999–2011. There were 1579 claims paid with a value of $80.4 million (see Figure 1B), averaging $50 924 per claim. These claims decreased by approximately 18 percent in number and 26 percent in value from the previous year. Failure to comply with program requirements resulted in the non-payment of 101 claims. On average, claims were processed within 18 working days once all the necessary documentation was received from the lender.

The Directorate received nine appeals of claim decisions. Each appeal is assessed on the basis of any additional information or clarifications. The Directorate rejected eight of these appeals. As of March 31, 2011, one appeal remains to be completed.

Figure 1B: Number and Value of Canada Small Business Financing Claims 1999–2011Footnote 1
Figure 1B: Number and Value of CSBF Claims, 1999–2011
Description of Figure

This vertical bar graph compares the total number of claims and the total value in millions of dollars of Canada Small Business Financing claims from 1999–2000 to 2010–2011. In 1999–2000 there were only 19 claims made compared with 1579 claims in 2010–2011. The total number of claims peaked in 2008–2009 with 1955 claims, followed by the next highest in 2009–2010 with 1933 claims. The value of claims in 2010–2011 was 80.4 million dollars. The value of claims in 2009–2010 was the highest at over 109 million dollars, followed by 2008–2009, which was about 101 million dollars. Just under 500 000 dollars was paid out in 1999–2000 and only 15 million dollars was paid out in claims in 2000–2001. The Canada Small Business Financing Program began on April 1, 1999. Claims are typically submitted within three to four years after loans are made. This explains the rising number of claims later in the life of the program.

For more details, see the Appendix, Table 1.

3.3 Loans and Claims by Province and Territory

The CSBF Program is used by businesses across Canada (see Figure 2). It is demand driven and variations in its use reflect choices made by lenders and borrowers across the country. However, it should be noted that the majority of Canadian small businesses operate in Quebec and Ontario. For 2010–11, the distribution of loans and claims is as follows:

  • The provinces of Quebec and Ontario had the largest share of the registered loans by value with a total of approximately $713.7 million (69 percent) and 4869 by number (65 percent).
  • The western provinces registered 1942 loans (26 percent) or $242.6 million by value (23.6 percent).
  • In the Atlantic provinces, 644 loans were registered (8.6 percent) or $69.3 million by value (6.8 percent).
  • As for claims paid, Quebec and Ontario accounted for $66.8 million (83 percent) of the total value.

The shares of loan and claim values by provinces and territories have remained fairly stable over the last two years.

Figure 2: Percent of Total Value of CSBF Loans and Claims by Province and Territory, 2010–11

Figure 2: Percent of Total Value of CSBF Loans and Claims by Province and Territory, 2010–11
Description of Figure

This map of Canada shows the percentage of the total value of Canada Small Business Financing loans and claims by province and territory for 2010–2011.

The highest percentage of loans was seen in Ontario with 35.2 percent, followed by Quebec at 34.4 percent. The lowest percentage values for loans are in the north with Yukon and Nunavut at zero percent and the Northwest Territories at 0.1 percent. The east also saw low percentage values for loans with Prince Edward Island at 0.2 percent, followed by Newfoundland and Labrador at 1.2 percent, Nova Scotia at 2.1 percent and New Brunswick at 3.3 percent. Western Canada had Alberta with the highest percentage value for loans at 12.5 percent, followed by British Columbia at 5.3 percent, Saskatchewan at 3.4 percent and Manitoba at 2.4 percent.

Similar to loans, the percentage of the total value of Canada Small Business Financing claims in 2010–2011 was highest in Ontario at 50.7 percent, followed by Quebec at 32.3 percent. The lowest percentage of claims was seen in the north with zero percent for Yukon and Nunavut and 0.3 percent for the Northwest Territories. The east also saw low percentage values for claims with Prince Edward Island at 0.2 percent, followed by Newfoundland and Labrador at 0.4 percent, Nova Scotia at 1.9 percent and New Brunswick at 2.5 percent. In the west, British Columbia had the highest percentage value for claims at 5.0 percent, followed by Alberta at 4.0 percent, Manitoba at 1.8 percent and Saskatchewan at 0.8 percent.

For more details, see the Appendix, Table 2.

3.4 Loans and Claims by Size of Loans

In 2010–11, there was a significant increase in the number and value of loans in excess of $250 000 compared to 2009–10, the first year that the maximum loan amount was increased to $500 000. There were 1209 loans (16 percent) in excess of $250 000 with a value of $405.7 million or 40 percent (see Figure 3). This contributed to an increase of approximately $74 million (7.7 percent) in the total value of loans and an increase of 8.7 percent in the average loan size from $126 481 to $137 521. The value of loans between $125 000 and $250 000 was approximately $365.6 million (36 percent by value).

The majority of claims were from loans made between $125 000 and $250 000. These loans resulted in claims being paid of $57.7 million (or 72 percent of total claims paid).

There were 10 claims paid for a total amount of $2.03 million on loans made with a value of more than $250,000. The data on the maximum loan amount will continue to be monitored and analyzed in future annual reports.

Figure 3: Percent of Total Value of CSBF Loans and Claims by Size of Loans, 2010–11

Figure 3: Percent of Total Value of CSBF Loans and Claims by Size of Loans, 2010–11
Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by size of loans for 2010–2011. The percentage of the total value of loans for zero dollars to 125 000 dollars was 24.9 percent, for 125 001 dollars to 250 000 dollars was 35.6 percent, for 250 001 dollars to 375 000 dollars was 31.2 percent and for 375 001 dollars to 500 000 dollars was 8.3 percent. The percentage of the total value for claims for zero dollars to 125 000 dollars was 25.7 percent, for 125 001 dollars to 250 000 dollars was 71.7 percent, for 250 001 dollars to 375 000 dollars was 2.5 percent and there were no claims for 375 001 dollars to 500 000 dollars.

For more details, see the Appendix, Table 3.

3.5 Loans and Claims by Asset Type

Figure 4 illustrates the total value of 2010–11 CSBF Program loans and claims by the type of assets eligible for financing:

  • Equipment accounted for the largest percentage of the total value of both loans (43 percent) and claims (59 percent). Relative to last year, the loan value percentage declined about 2.5 percent while the claim percentage remained stable.
  • Leasehold improvements accounted for 29 percent of the total value of all loans and 34 percent of the total value of claims. This represents a decrease of about 1.5 percent in the value of loans relative to last year. The percentage for claims has remained somewhat stable.
  • Real property represented the smallest percentage of the total value of loans (28 percent) and the total value of claims (7 percent). In comparison to 2009–10, the percentage value of loans for real property increased by approximately 4 percent. Since the maximum loan amount was increased in 2009 from $250 000 to $500 000, the value of loans made for real property increased by 58 percent from $178.5 million in 2008–09 to $282.6 million in 2010–11.

Equipment loans have the lowest average loan value at $102,310. Leasehold improvement loans averaged $161,318. Real property loans had significantly higher average loans at $222,183.

Figure 4: CSBF Loans and Claims by Asset Type, 2010–11

Figure 4: CSBF Loans and Claims by Asset Type, 2010–11
Description of Figure

This figure has two pie charts that break down Canada Small Business Financing loans and claims by asset type for 2010–2011.

Canada Small Business Financing made 7466 loans totalling 1.03 billion dollars. Equipment made up 43.1 percent (442.3 million dollars and 4323 loans) of Canada Small Business Financing loans, followed by leasehold improvements at 29.4 percent (301.8 million dollars and 1871 loans) and real property at 27.5 percent (282.6 million dollars and 1272 loans).

Canada Small Business Financing received 1579 claims totalling 80.4 million dollars. Equipment made up 58.9 percent (47.3 million dollars and 1029 claims), followed by leasehold improvements at 34.3 percent (27.6 million dollars and 436 claims) and real property at 6.8 percent (5.5 million dollars and 114 claims).

3.6 Loans and Claims by Industry Sector

The industry sector in which small businesses operate is part of the information provided by lenders. Based on this information, the following patterns for industry sectors were observed in 2010–11 (see Figure 5):

  • The four main industry sectors by value of lending are: accommodation and food services (27.4 percent), retail trade (16.8 percent), transportation and warehousing (6.5 percent), and manufacturing (6.7 percent).
  • During this reporting period, the value of claims paid to these sectors was as follows: accommodation and food services (34 percent), retail trade (19.7 percent), transportation and warehousing (3.9 percent), and manufacturing (10 percent).

These top four industry sectors together accounted for 57.4 percent of the total value of loans and 67.6 percent of the total value of claims.

Figure 5: Percent of Total Value of CSBF Loans and Claims by Main Industry Sector, 2010–11

Figure 5: Percent of Total Value of CSBF Loans and Claims by Main Industry Sector, 2010–11

Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by main industry sector for 2010–2011.

For Canada Small Business Financing loans, accommodation and food services had the highest percentage of the total value at 27.4 percent, followed by retail trade at 16.8 percent, manufacturing at 6.7 percent, and transportation and warehousing at 6.5 percent.

For Canada Small Business Financing claims, accommodation and food services had the highest percentage of the total value at 34.0 percent, followed by retail trade at 19.7 percent, manufacturing at 10.0 percent, and transportation and warehousing at 3.9 percent.

For more details, see the Appendix, Table 4.

3.7 Loans and Claims by Age of Business

As outlined in Section 1 "Overview of the CSBF Program," one of the indicators of incrementality is the number of start-ups and new businesses that receive loans. In 2010–11, businesses that were in operation for less than one year accounted for more than half of the value of all loans made, that is, $587.9 million or 57 percent of the value (see Figure 6). These businesses accounted for $61.6 million or 77 percent of the claims during this same period. Over the last three years the percentages for loans and claims have remained constant for all businesses irrespective of their age.

Figure 6: CSBF Loans and Claims by Age of Business, 2010–11

Figure 6: CSBF Loans and Claims by Age of Business, 2010–11

Description of Figure

This figure has two pie charts that break down Canada Small Business Financing loans and claims by age of business for 2010–2011.

Canada Small Business Financing made 7466 loans totalling 1.03 billion dollars. Businesses less than 1 year old made up the largest group for loans at 57.3 percent (587.9 million dollars and 3733 loans), followed by businesses more than 3 years old at 31.7 percent (325.8 million dollars and 2752 loans) and businesses 1 to 3 years old at 11.0 percent (113.0 million dollars and 981 loans).

Canada Small Business Financing received 1579 claims totalling 80.4 million dollars. Businesses less than 1 year old made up the largest group for claims at 76.6 percent (61.6 million dollars and 1112 claims), followed by businesses more than 3 years old at 14.0 percent (11.2 million dollars and 270 claims) and businesses 1 to 3 years old at 9.5 percent (7.6 million dollars and 197 claims).

For more details, see the Appendix, Table 5.

3.8 Loans and Claims by Business Size

Businesses with annual revenues less than $1 million accounted for 73 percent of the value and 80 percent of the number of all loans made in 2010–11 as well as 76 percent of the claims paid (see Figure 7). Businesses with revenues between $1 million and $2 million accounted for the next largest percentage of the loan values, 18 percent (13 percent of the number of loans).

Figure 7: Percent of Total Value of CSBF Loans and Claims by Business SizeFootnote 2, 2010–11

Figure 7: Percent of Total Value of CSBF Loans and Claims by Business Size, 2010–11
Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by business size for 2010–2011 based on the borrower's revenue forecasts at the time of loan registration. Canada Small Business Financing loans to borrowers with revenue forecasts of zero to 1 million dollars were highest at 73.3 percent of the total value of loans, followed by borrowers with revenue forecasts of 1 000 001 dollars to 2 million dollars at 17.8 percent, borrowers with revenue forecasts of 2 000 001 dollars to 3 million dollars at 5.6 percent, borrowers with revenue forecasts of 3 000 001 dollars to 4 million dollars at 1.9 percent and borrowers with revenue forecasts of 4 000 001 dollars to 5 million dollars at 1.3 percent.

Canada Small Business Financing claims from borrowers with revenue forecasts of zero to 1 million dollars were highest at 75.7 percent of the total value of claims, followed by borrowers with revenue forecasts of 1 000 001 dollars to 2 million dollars at 17.1 percent, borrowers with revenue forecasts of 2 000 001 dollars to 3 million dollars at 4.7 percent, borrowers with revenue forecasts of 3 000 001 dollars to 4 million dollars at 1.9 percent and borrowers with revenue forecasts of 4 000 001 dollars to 5 million dollars at 0.5 percent.

For more details, see the Appendix, Table 6

3.9 Loans and Claims by Type of Borrower and Business

Type of Borrower

Under the CSBF Program, borrowers can carry on a small business as a corporation, a partnership or as a sole proprietor. In 2010–11, corporations received 91 percent of the total value of loans, partnerships received 3 percent and sole proprietors received 6 percent (see Figure 8). This has remained relatively stable over the last two years. The data for claims show a similar pattern to loans: loans made to corporations resulted in 94 percent of the claims, 2 percent for partnerships and 4 percent for sole proprietors.

Figure 8: Percent of Total Value of CSBF Loans and Claims by Type of Borrower, 2010–11

Figure 8: Percent of Total Value of CSBF Loans and Claims by Type of Borrower, 2010–11
Description of Figure

This vertical bar graph compares the percentage of the total value of Canada Small Business Financing loans and claims by type of borrower for 2010–2011. For Canada Small Business Financing loans, corporations had the highest percentage of the total value at 90.7 percent, followed by sole proprietorships at 6.1 percent and partnerships at 3.3 percent. For Canada Small Business Financing claims, corporations had the highest percentage of the total value at 93.7 percent, followed by sole proprietorships at 4.3 percent and partnerships at 1.9 percent.

For more details, see the Appendix, Table 7.

Type of Business

A franchise is a business relationship between a franchisor and a franchisee where the franchisee is given the right to use the franchisor's name, products and ongoing support. In 2010–11, franchise businesses accounted for 16 percent of the total value of loans and 24 percent of the total value of claims. This represents a 5 percent decrease in the value of loans and a 6 percent increase in the value of claims from 2009–10. The non-franchise businesses accounted for 84 percent of the total value of loans (a 5 percent increase) and 76 percent of the value of claims (a 6 percent decrease).

Footnotes

Footnote 1

The CSBF Program began on April 1, 1999. Claims are typically submitted within three to four years after loans are made. This explains the rising number of claims later in the life of the program.

Return to footnote 1 referrer

Footnote 2

Based on borrower's revenue forecasts at time of loan registration.

Return to footnote 2 referrer

Annual Report 2010–2011

4. The Crown's Program Liability

Maximum liability: The Canada Small Business Financing Act establishes a $1.5-billion liability ceiling for each five-year lending period. The Government of Canada's payments with respect to all loans registered under the program, for each lending period, is limited to the sum of the liability to each lender, capped by the 90–50–12 (or 10) formula as described in Section 2 "Program Requirements."

Contingent liability: This liability is calculated as the lower of the maximum liability less claims paid to lenders and 85 percent of the outstanding loan balance amount. This would represent the maximum amount of money that the government may have to pay to lenders if all outstanding loans were to default simultaneously as at March 31, 2011.

The table below summarizes the maximum and contingent liabilities for each five-year lending period as at March 31, 2011.

Maximum and Contingent Liabilities for Each Five-Year Lending Period as at March 31, 2011
Fiscal Years Maximum Liability
($000)
Contingent Liability
($000)
1999–2004 683 005.5 81 432.2
2004–09 654 546.7 272 122.5
2009–11 341 148.6 334 420.4

Cost recovery: The CSBF Program generates fees by means of a 2-percent registration fee and a 1.25-percent annual administration fee paid on the loans. These fees are meant to offset the claims paid on loans. They do not cover the operating expenses for the program.

The table below is a summary of the revenues and expenses for each lending period as at March 31, 2011.

Revenue and Expense Summary by Lending Period as at March 31, 2011
Fiscal Years Revenues
($000)
Expenses
($000)
Cumulative
Revenues and Expenses
($000)
1999–2004 289 264.6 416 472.3 (127 207.7)
2004–09 247 969.0 388 852.4 (140 883.4)
2009–11 60 426.0 9 983.8 50 442.2

Details of the revenue and claim expenses on a year-by-year basis are outlined in Tables 8a, 8b and 8c in the Appendix. An analysis of cost recovery and the economic benefits delivered by the CSBF Program can be found in the Comprehensive Review Report for 2004–09 (see Section 6 "Second Comprehensive Review").

Annual Report 2010-2011

5. Capital Leasing Pilot Project

The Capital Leasing Pilot Project (CLPP) was discontinued on March 31, 2007. Nevertheless, claims continue to be processed and administration fee revenues received on leases registered. There were 37 claims paid in 2010-11 representing $1.7 million and 5 claims not paid due to non-compliance with program requirements. For detailed information, see Table 9 in the Appendix.

Since the project started in 2002, revenues totalled $6.5 million and claim expenses totalled $9.4 million, resulting in a net cost of approximately $3.0 million as at March 31, 2011.

The maximum liability of the CLPP when it was discontinued was $15.7 million. As at March 31, 2011, the Crown's contingent liability was calculated at $4.7 million. Contingent liability—the amount that the government may be called upon to pay to lessors—is the lower of the maximum liability less claims paid to lessors and 85 percent of the outstanding lease balance amounts.

Annual Report 2010-2011

6. Future Directions

Electronic Transfer of Registration Data and Fees

In March 2011, the CSBF Program launched a process that enables lenders to electronically:

  • submit and modify loan registrations;
  • receive and print registration confirmations;
  • view the status of loan registrations and claims;
  • submit and track registration fee transfers; and
  • request and receive refund payments for decreased loan amounts.

These electronic processes will increase efficiency, reduce paper and administrative burden, improve data integrity, service delivery and reporting. The Directorate will work with lenders to roll out the application.

Second Comprehensive Review

The report of the second comprehensive review, as mandated by the Canada Small Business Financing Act, was tabled in Parliament in April 2010. While the review confirmed the Program's importance, effectiveness and its significant benefits to the Canadian economy, it also acknowledged that a lack of awareness, administrative burden and lender profitability issues hinder the use of the CSBF Program. Program design elements are being examined to strengthen and modernize the program, thereby ensuring its long term viability as a vehicle to increase access to financing for small businesses. The report, and related research, is available on the CSBF Program website.

Annual Report 2010-2011

Appendix

Note: Supplemental annual data for fiscal years 1999-2011 for all of the tables are available on the CSBF Program website.

Canada Small Business Financing Act—Tables 1 to 8

Table 1: Summary of Financial Activities per Fiscal Year—CSBF Program
Fiscal year Loans Revenues Expenses Net revenues
less expenses
($000)
Number Value
($000)
Average
size
($000)
Fees
($000)
Number
of
claims
Expenses
($000)

Footnotes

Footnote a

Totals may not add up due to rounding.

Return to footnote a referrer

1999-2000 17 741 1 352 320.5 76.2 33 406.6 19 494.6 32 912.0
2000-01 14 442 1 159 048.0 80.3 43 134.5 307 14 769.0 28 365.5
2001-02 11 016 899 247.6 81.6 44 576.2 915 43 444.3 1 131.9
2002-03 11 263 951 159.1 84.4 48 433.2 1 409 68 791.3 (20 358.0)
2003-04 11 085 999 868.3 90.2 51 553.2 1 553 71 662.7 (20 109.5)
2004-05 11 142 1 041 063.0 93.4 53 820.7 1 620 76 460.1 (22 639.4)
2005-06 10 790 1 087 701.8 100.8 56 220.8 1 598 71 679.3 (15 458.5)
2006-07 9 595 1 024 535.6 106.8 55 769.9 1 681 80 289.4 (24 519.5)
2007-08 8 930 987 662.6 110.6 55 066.8 1 835 96 341.1 (41 274.3)
2008-09 7 796 901 120.2 115.6 52 895.2 1 955 101 509.4 (48 614.2)
2009-10 7 534 952 909.8 126.5 52 393.3 1 933 109 458.9 (57 065.6)
2010-11 7 466 1 026 729.3 137.5 50 389.2 1 579 80 408.5 (30 019.3)
TotalFootnote a 128 880 12 383 365.8 96.1 597 659.6 16 404 815 308.5 (217 648.9)
Table 2: Loans and Claims—by Province and Territory for 2010-2011—CSBF Program
Province or territory Loans Claims
Number Value
($000)
Percent of
total value
Average
($000)
Number Value
($000)
Percent of
total value
Average
($000)

Footnotes

Footnote b

Totals may not add up due to rounding.

Return to footnote b referrer

Newfoundland and Labrador 93 11 860.6 1.2 127.5 24 333.2 0.4 13.9
Prince Edward Island 27 1 988.6 0.2 73.7 4 166.5 0.2 41.6
Nova Scotia 212 21 943.6 2.1 103.5 40 1 513.6 1.9 37.8
New Brunswick 312 33 534.2 3.3 107.5 47 2 032.3 2.5 43.2
Quebec 2 532 352 706.3 34.4 139.3 487 25 981.0 32.3 53.3
Ontario 2 337 360 950.9 35.2 154.5 728 40 794.9 50.7 56.0
Manitoba 244 24 386.7 2.4 99.9 35 1 469.6 1.8 42.0
Saskatchewan 347 34 679.9 3.4 99.9 15 649.5 0.8 43.3
Alberta 871 128 684.0 12.5 147.7 99 3 255.2 4.0 32.9
British Columbia 480 54 802.2 5.3 114.2 97 3 984.1 5.0 41.1
Yukon 1 87.2 0.0 87.2
Northwest Territories 8 878.9 0.1 109.9 3 228.6 0.3 76.2
Nunavut 2 226.3 0.0 113.1
TotalFootnote b 7 466 1 026 729.3 100.0 137.5 1 579 80 408.5 100.0 50.9
Table 3: Loans and Claims—by Size of Loans for 2010-11CSBF Program
Size of loans Loans Claims
Number Value
($000)
Percent of
total value
Average
($000)
Number Value
($000)
Percent of
total value
Average
($000)

Footnotes

Footnote c

Totals may not add up due to rounding.

Return to footnote c referrer

$0 to $125 000 4 237 255 462.9 24.9 60.3 863 20 701.9 25.7 24.0
$125 001 to $250 000 2 020 365 595.3 35.6 181.0 706 57 672.6 71.7 81.7
$250 001 to $375 000 1 018 320 017.8 31.2 314.4 10 2 034.1 2.5 203.4
$375 001 to $500 000 191 85 653.3 8.3 448.4
TotalFootnote c 7 466 1 026 729.3 100.0 137.5 1 579 80 408.5 100.0 50.9
Table 4: Loans and Claims—by Industry Sector for 2010-11CSBF Program
Industry sector Loans Claims
Number Value
($000)
Percent of
total value
Average
($000)
Number Value
($000)
Percent of
total value
Average
($000)

Footnotes

Footnote d

Totals may not add up due to rounding.

Return to footnote d referrer

Accommodation and Food Services 1 575 281 422.6 27.4 178.7 412 27 304.1 34.0 66.3
Manufacturing 453 68 921.4 6.7 152.1 148 8 062.6 10.0 54.5
Other Services 708 90 334.9 8.8 127.6 262 12 261.0 15.2 46.8
Retail Trade 1 130 172 053.9 16.8 152.3 308 15 860.2 19.7 51.5
Transportation and Warehousing 864 66 818.2 6.5 77.3 128 3 157.8 3.9 24.7
Other Sectors 2 736 347 178.3 33.8 126.9 321 13 762.7 17.1 42.9
TotalFootnote d 7 466 1 026 729.3 100.0 137.5 1 579 80 408.5 100.0 50.9
Table 5: Loans and Claims—by Age of Business for 2010-11CSBF Program
Age of Business Loans Claims
Number Value
($000)
Percent of
total value
Average
($000)
Number Value
($000)
Percent of
total value
Average
($000)

Footnotes

Footnote e

Totals may not add up due to rounding.

Return to footnote e referrer

Less than 1 year 3 733 587 937.6 57.3 157.5 1 112 61 577.1 76.6 55.4
1 to 3 years 981 113 028.5 11.0 115.2 197 7 608.9 9.5 38.6
More than 3 years 2 752 325 763.2 31.7 118.4 270 11 222.5 14.0 41.6
TotalFootnote e 7 466 1 026 729.3 100.0 137.5 1 579 80 408.5 100.0 50.9
Table 6: Loans and Claims—by Business Size for 2010-11CSBF Program
Business size
(annual revenues)Footnote f
Loans Claims
Number Value
($000)
Percent of
total value
Average
($000)
Number Value
($000)
Percent of
total value
Average
($000)

Footnotes

Footnote f

Based on borrower's revenue forecasts at the time of loan registration.

Return to footnote f referrer

Footnote g

Totals may not add up due to rounding.

Return to footnote g referrer

$0 to $1 000 000 6 002 752 848.3 73.3 125.4 1 277 60 888.9 75.7 47.7
$1 000 001 to $2 000 000 1 003 183 049.1 17.8 182.5 220 13 788.5 17.1 62.7
$2 000 001 to $3 000 000 292 57 682.1 5.6 197.5 55 3 793.9 4.7 69.0
$3 000 001 to $4 000 000 110 19 483.6 1.9 177.1 21 1 543.5 1.9 73.5
$4 000 001 to $5 000 000 59 13 666.2 1.3 231.6 6 393.7 0.5 65.6
TotalFootnote g 7 466 1 026 729.3 100.0 137.5 1 579 80 408.5 100.0 50.9
Table 7: Loans and Claims—by Type of Borrower for 2010-11CSBF Program
Type of borrower Loans Claims
Number Value
($000)
Percent of
total value
Average
($000)
Number Value
($000)
Percent of
total value
Average
($000)

Footnotes

Footnote h

Totals may not add up due to rounding.

Return to footnote h referrer

Corporation 6 361 930 762.6 90.7 146.3 1 371 75 361.9 93.7 55.0
Partnership 296 33 390.2 3.3 112.8 55 1 558.9 1.9 28.3
Sole Proprietorship 809 62 576.6 6.1 77.4 153 3 487.7 4.3 22.8
TotalFootnote h 7 466 1 026 729.3 100.0 137.5 1 579 80 408.5 100.0 50.9
Table 8a: Revenues and Expenses—Loans Made from April 1, 1999 to March 31, 2004— CSBF Program
Fiscal year Value of loans
($000)
Revenues Footnote i and expenses Year associated fees were due and associated claims were received ($000) Cumulative revenues
and expenses
($000)
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Footnotes

Footnote i

Revenues are composed of the 2-percent registration fees and the 1.25-percent administration fees.

Return to footnote i referrer

Footnote j

Totals may not add up due to rounding.

Return to footnote j referrer

1999-2000 1 352 320.5 Fees 33 406.6 12 980.9 10 305.6 7 274.6 4 785.0 2 821.6 1 726.1 1 033.9 587.5 304.2 75 226.1
Expenses (494.6) (14 258.3) (33 482.9) (32 250.9) (17 261.3) (8 954.4) (4 043.5) (1 855.6) (950.7) (664.7) (142.1) (83.0) (114 442.0)
Annual cash flow 32 912.0 (1 277.4) (23 177.3) (24 976.3) (12 476.3) (6 132.8) (2 317.4) (821.7) (363.2) (360.4) (142.1) (83.0) (39 215.9)
2000-01 1 159 048.0 Fees 30 153.6 10 928.3 8 599.2 6 181.9 3 987.9 2 218.5 1 330.1 790.7 455.5 252.7 64 898.3
Expenses (510.7) (9 641.2) (28 589.5) (28 592.6) (18 355.8) (6 908.0) (3 838.5) (1 809.8) (562.0) (328.3) (120.9) (99 257.1)
Annual cash flow 29 642.8 1 287.1 (19 990.3) (22 410.7) (14 367.9) (4 689.6) (2 508.4) (1 019.1) (106.5) (75.5) (120.9) (34 358.8)
2001-02 899 247.6 Fees 23 342.4 8 231.3 6 570.7 4 657.7 2 884.8 1 595.0 955.8 574.1 350.2 202.6 49 364.7
Expenses (320.2) (7 569.1) (18 089.6) (19 614.8) (8 116.7) (5 651.0) (2 782.0) (1 073.6) (890.4) (272.5) (64 379.9)
Annual cash flow 23 022.1 662.2 (11 518.9) (14 957.1) (5 231.9) (4 056.0) (1 826.2) (499.5) (540.1) (69.9) (15 015.2)
2002-03 951 159.1 Fees 24 328.1 8 534.9 6 669.2 4 478.4 2 720.9 1 486.6 893.3 564.3 360.9 50 036.5
Expenses (381.8) (7 426.4) (19 959.3) (16 664.3) (8 477.6) (5 432.4) (2 506.2) (1 681.8) (575.7) (63 105.4)
Annual cash flow 23 946.3 1 108.5 (13 290.2) (12 185.9) (5 756.7) (3 945.7) (1 612.9) (1 117.5) (214.8) (13 068.9)
2003-04 999 868.3 Fees 25 480.7 8 518.6 6 298.7 4 141.6 2 497.6 1 367.4 863.6 570.9 49 739.0
Expenses (292.8) (8 837.8) (24 261.5) (19 332.9) (11 245.3) (6 744.2) (2 865.1) (1 708.2) (75 287.9)
Annual cash flow 25 187.9 (319.2) (17 962.8) (15 191.4) (8 747.7) (5 376.8) (2 001.5) (1 137.3) (25 548.9)
Total Footnote j 5 361 643.4 Fees 33 406.6 43 134.5 44 576.2 48 433.2 51 553.2 26 654.9 17 606.4 10 821.5 6 318.2 3 594.5 2 030.8 1 134.5 289 264.6
Expenses (494.6) (14 769.0) (43 444.3) (68 791.3) (71 662.7) (75 722.1) (59 994.0) (39 155.5) (22 220.0) (11 550.7) (5 907.6) (2 760.3) (416 472.3)
Annual cash flow 32 912.0 28 365.5 1 131.9 (20 358.0) (20 109.5) (49 067.2) (42 387.6) (28 334.0) (15 901.9) (7 956.2) (3 876.8) (1 625.8) (127 207.7)
Table 8b: Revenues and Expenses—Loans Made from April 1, 2004 to March 31, 2009— CSBF Program
Fiscal year Value of loans
($000)
Revenues Footnote k
and
expenses
Year associated fees were due and associated claims were received ($000) Cumulative
revenues and
expenses
($000)
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2009-11

Footnotes

Footnote k

Revenues are composed of the 2-percent registration fees and the 1.25-percent administration fees.

Return to footnote k referrer

Footnote l

Totals may not add up due to rounding.

Return to footnote l referrer

2004-05 1 041 063.0 Fees 27 165.8 10 233.7 8 076.8 5 827.7 3 898.2 2 230.3 1 072.3 58 504.8
Expenses (738.0) (11 226.1) (23 552.2) (21 001.2) (13 523.8) (6 543.4) (2 673.0) (79 257.8)
Annual cash flow 26 427.8 (992.4) (15 475.4) (15 173.5) (9 625.7) (4 313.1) (1 600.7) (20 753.0)
2005-06 1 087 701.8 Fees 28 380.6 10 345.6 8 127.5 5 950.9 3 845.4 1 738.3 58 388.4
Expenses (459.1) (16 418.7) (33 349.0) (25 678.9) (17 261.1) (7 068.5) (100 235.4)
Annual cash flow 27 921.5 (6 073.1) (25 221.5) (19 728.0) (13 415.8) (5 330.2) (41 847.1)
2006-07 1 024 535.6 Fees 26 525.9 9 418.2 7 507.7 5 200.9 2 574.5 51 227.3
Expenses (1 162.9) (18 812.1) (31 646.9) (27 036.7) (12 896.3) (91 555.0)
Annual cash flow 25 363.0 (9 393.9) (24 139.1) (21 835.8) (10 321.8) (40 327.7)
2007-08 987 662.6 Fees 25 375.1 8 904.7 6 795.0 3 687.2 44 762.0
Expenses (958.6) (18 017.9) (39 153.2) (22 995.1) (81 124.7)
Annual cash flow 24 416.5 (9 113.2) (32 358.2) (19 307.9) (36 362.7)
2008-09 901 120.2 Fees 23 039.2 7 545.0 4 502.3 35 086.6
Expenses (1 091.2) (13 544.1) (22 044.2) (36 679.5)
Annual cash flow 21 948.0 (5 999.0) (17 541.9) (1 592.9)
Total Footnote l 5 042 083.2 Fees 27 165.8 38 614.4 44 948.4 48 748.6 49 300.7 25 616.6 13 574.6 247 969.0
Expenses (738.0) (11 685.2) (41 133.8) (74 121.0) (89 958.7) (103 538.5) (67 677.2) (388 852.4)
Annual cash flow 26 427.8 26 929.1 3 814.5 (25 372.4) (40 658.0) (77 921.9) (54 102.5) (140 883.4)
Table 8c: Revenues and Expenses—Loans Made from April 1, 2009 to March 31, 2011— CSBF Program
Fiscal year Value of loans
($000)
Revenues Footnote m
and
expenses
Year associated fees were due
and associated claims were received ($000)
Cumulative
revenues and
expenses
($000)
2009-10 2010-11

Footnotes

Footnote m

Revenues are composed of the 2-percent registration fees and the 1.25-percent administration fees.

Return to footnote m referrer

Footnote n

Totals may not add up due to rounding.

Return to footnote n referrer

2009-10 952 909.8 Fees 24 745.9 9 322.3 34 068.2
Expenses (12.8) (9 501.8) (9 514.6)
Annual cash flow 24 733.1 (179.5) 24 553.6
2010-11 1 026 729.3 Fees 26 357.8 26 357.8
Expenses (469.2) (469.2)
Annual cash flow 25 888.6 25 888.6
Total Footnote n 1 979 639.2 Fees 24 745.9 35 680.1 60 426.0
Expenses (12.8) (9 971.0) (9 983.8)
Annual cash flow 24 733.1 25 709.1 50 442.2

Capital Leasing Pilot Project (CLPP)—Table 9

Table 9: Summary of Financial Activities per Fiscal Year— CLP Project
Fiscal year Loans Revenues Expenses Net revenues
less
expenses
($000)
Number Value
($000)
Average
size
($000)
Fees Footnote o
($000)
Number
of
claims
Expenses
($000)

Footnotes

Footnote o

Revenues are composed of the 2-percent registration fees and the 1.25-percent administration fees.

Return to footnote o referrer

Footnote p

Totals may not add up due to rounding.

Return to footnote p referrer

2002-03 57 8 773.7 153.9 210.6 210.6
2003-04 124 16 208.5 130.7 480.2 480.2
2004-05 288 26 006.5 90.3 864.7 1 11.3 853.4
2005-06 441 37 977.7 86.1 1 351.3 17 503.7 847.6
2006-07 588 47 292.3 80.4 1 803.1 16 443.1 1 360.0
2007-08 831.0 36 688.9 142.1
2008-09 512.5 102 3 579.8 (3 067.3)
2009-10 266.2 64 2 473.7 (2 207.5)
2010-11 151.8 37 1 741.0 (1 589.1)
Total Footnote p 1 498 136 258.6 91.0 6 471.4 273 9 441.4 (2 970.0)