ARCHIVED—Canada Small Business Financing Act — 2007-2008

5. Capital Leasing Pilot Project

The five-year Capital Leasing Pilot Project (CLPP), which was launched on April 1, 2002 to identify and test the viability and utility of the CSBF Program for capital leasing, was discontinued on March 31, 2007. Research and results of the pilot project have shown that the vast majority of Canadian small business’ capital leasing needs are being met in the marketplace without government assistance. The CSBF Program Directorate continues to process claims, administration fee revenues and recoveries from leases registered before 2007.

5.1 Revenues and Expenses

For the six-year period (2002–08), revenues reached $5.6 million. Total claim expenses were $1.9 million, resulting in a net balance of $3.7 million (see Table 3). A positive net balance early in the term is expected because fees on leases start being collected at the time of registration, while claims are typically submitted within four years after leases are made. There were 35 claims received in 2007–08. For more information, see Appendix B, Table I.

Table 3: Cumulative Revenues and Expenses, CLPP

	2002–08 ($000)
Revenues
Registration fees	2 673.35
Administration fees	2 910.41
Total revenues	5 583.76
Expenses
Claims paid	1 854.48
Total expenses	1 854.48
Total revenues less total expenses	3 729.28

Details may not add up to totals because of rounding.

For more information, see Appendix B, Table II.

5.2 The Crown’s Program Liability

To limit the Government of Canada’s exposure, the CLPP established a $400-million maximum liability ceiling.⁵ For leases made under the pilot project, the maximum liability was $15.7 million, well below the statutory limit.

On March 31, 2008, the Crown’s contingent liability was calculated at $14.0 million. Contingent liability is the maximum amount of money that the government may be called upon to pay to lessors if all leases were to default simultaneously. The contingent liability is calculated as the lesser of the maximum liability less reimbursement of losses by the government or outstanding balance amounts of capital leases.

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⁵ The Government of Canada’s maximum contingent liability is calculated as the sum of the Government of Canada’s contingent liability to each lessor, per lease period, capped by the 90–50–10 formula. This formula limits the Crown’s payments with respect to any lessor according to the following: 90 percent of the first $250 000 of leases in a lessor’s account, 50 percent on the next $250 000 and 10 percent of all remaining leases.