Mr. Speaker, I am pleased to take part in this debate at third reading on the Canada Small Business Financing Act.
When the time comes to amend a piece of legislation such as this that has been around for several years, care must be taken to ensure that it will meet the existing as well as the future needs of business.
It was in this perspective that the member for Mercier and the member for Lévis in particular analysed the bill, and that we proposed amendments and suggested improvements in order to ensure that the Canada Small Business Financing Act will allow small businesses reliable access to financing so that they can be competitive.
Today and tomorrow, new businesses that are created will have to keep pace with international competition. This is just as true for those starting up as it is for those expanding. They must be able to keep pace with international competition, have core financing that will give them a solid base on which to grow, to sell their goods outside the country, to export, to compete globally.
This requires flexibility in terms of businesses' accessibility to financing.
Does the bill before us meet this requirement? I think that the amendments to the initial bill represent interesting technical improvements.
In my view, the Bloc Quebecois has offered constructive criticism of the bill and proposed amendments that we feel would have made it that much better. There are questions to be asked, however. Will the bill help meet the needs with respect to preparing and launching a business, consultant services and business expansion? Considering all these questions, there is still room for improvement.
I would like to speak to that as a member of parliament. I have now been a member of parliament for five years.
Almost every week, in my constituency, at least one person comes to us with a business proposal. A new generation of entrepreneur is born. Some people are fully equipped to launch a business with management training, technical skills or engineering diplomas.
But there is a new type of entrepreneur, people who do not necessarily have all the needed tools to manage a business. I mean young people, women, the 50 to 55-year olds who face a basic change. They were always salaried workers and all of a sudden, their business closes and they have to adjust, to be flexible and to face new situations. They often come to us because they have a hard time finding the right place to go for adequate financing.
This is particularly true of women. This is something that strikes me at home. Women who want to go into business run into the system's negative, paralysing aspects because all the financing rules were set by men. When women have a project, they need to be a little better in order to get financing.
In the proposal under consideration, I would have liked the government to take even more responsibility and to find a way to avoid cold financial calculations done by computer in which the borrower is told: “This is our business loan software. If you fit our profile and if you have some extra money, we will give you a loan”.
But the situation is sometimes different with new products, as we saw in the last few years. I recall the case of a young entrepreneur from my area who wanted to produce an electronic tuner for musical instruments. A hi-tech device like that cannot be developed in three weeks. It takes time and money. It took almost one year to develop the project and we were looking for support. We checked all existing programs. It was not easy. That young man and his family had to invest time and money. The bill could have made it easier to start up this kind of business. In this case, the entrepreneur had a solid technological background.
Just last week, I saw someone who wanted to open a specialized butcher shop in my region. Because of his background and past experience, this man did not have easy access to credit. How can someone get their foot in the door so they can receive the help and direction they need to bring their project to fruition? Our new businesses expect their lenders to provide financial advice as well and to support them through their growing pains.
The bill before us today includes many provisions that reflect the experience of the past 20 or 25 years. However, the government should have had an even more open attitude.
The member for Trois-Rivières alluded to the social mandate that financial institutions must have. In Quebec, we had an interesting experience with the development of lending tools such as the Fonds de solidarité des travailleurs. Our caisses populaires have tempered what I would call the more mechanical aspect of the banks' operations, thus helping create an attitude different from that of the banks themselves.
When I first came here in 1993, Liberal members had a lot to say against banks and they wanted to revolutionize the way banks were doing things. Liberal members have been procrastinating since then. They have played along with the current system. But there was a concrete reality. In Ontario and in the other English speaking provinces, the competition created in Quebec by the Fonds de solidarité des travailleurs, by the caisses populaires and by the other forms of assistance did not necessarily exist.
Competition generates quality. Quebec had more lending services, and this promoted a more open attitude among banks and lending institutions.
I believe the changes to this piece of legislation reflect the influence of the model developed in Quebec. Interestingly, some elements of it, but not enough, can be found in the legislation.
We must look at the issue beyond this bill. Our financial institutions might give themselves a time frame so that, if within the next five years we do not see more openness on the part of banking institutions, we will use a more stringent approach. This could have been included in the bill.
Another tool we can use to this end is community reinvestment. In this respect, the hon. member for Hochelaga—Maisonneuve introduced a private member's bill based on the experience in the United States, which responds to what we are experiencing today as revealed by the poll of financial institutions conducted by the member for Mercier. In order to have solid arguments to present in favour of this bill, and to find out what people really thought, the Bloc Quebecois consulted the population.
We found that credit availability is a major concern for 29% of small business owners. According to our poll, 89% of SMBs said they find it very difficult, or difficult, to get credit at a reasonable cost, whereas only 10% said it was easy to get financing.
There is a need. Certainly our respondents may be the ones who ran into the most obstacles. Often the ones who do not run into obstacles have fewer tales to tell. But the facts are there. Many companies are experiencing difficulties with competition these days. There is competition everywhere. A company needs to always be sure that the required products can be provided in time, that they are quality products, and that they can be distributed and sold.
Businesses run into all manner of obstacles. The situation is far different from what it was 10, 15 or 20 years ago. At that time, markets were nearly all domestic, within either the economic space of Quebec or the economic space of Canada. Today, markets are world-wide.
In the La Pocatière region, maple syrup producers are making direct sales by Internet to Japan, China and just about everywhere else in Asia. This is a new trade reality. When a business seeks a loan, the banks need to understand that a large building is no longer necessary as collateral; an idea must be acceptable. This is not easy for banks to understand. This is one factor to consider in the present situation.
The other factor I wish to address is processing. Will this bill allow businesses to obtain the necessary credit? Sometimes the person creating a processing business is already a producer, a producer of natural resources, or a farmer, for instance, producing vegetables or working in a food processing sector. And now he must make the transition from producer to processor. Not everyone is born with these abilities.
He must therefore determine what technical skills he will need, whom he should have as an ally. He has to be ready to accept an inflow of capital other than his own money, so that his business can grow.
Of course, all of this happens in regions without a lot of people. New markets have to be found. When we meet these people in our riding offices, we realize that funding requirements are always a big concern of theirs. It is always an issue.
We can also get frustrated when we have to deal, in our offices, with people who have what appear to be very worthy projects and we try to understand why banks are turning them down, we try to support them throughout the process and we find out about some of the problems they are facing.
The small business loans guarantee program improved over the years. It has had its ups and downs. All sorts of situations have arisen.
In the vast majority of cases, care must be taken to ensure that the program really provides investment assistance. I have a bit of a problem with those who state that businesses do not need this guarantee to start up. But this must also be viewed from another angle: without this loans guarantee program, most businesses could not start up, could they?
In our regions, jobs are created by small business, that is small and very small businesses. These are sometimes businesses with one, three, four, five or ten employees, which will operate for years with this limited staff.
Owners must also act as the finance director, production director and marketing director, and they must wear all these hats at the same time, while meeting governmental bureaucratic requirements. They require some flexibility as well as access to assistance. The Small Business Loans Act is the kind of tool through which such assistance can be provided.
Will the bill before us give our businesses more ready access to loans? It addresses many interesting topics, including capital gains. I also think there will need to be some kind of tacit agreement between financial institutions and governments with regard to the new attitude of openness to allow projects to be carried out.
Earlier, we talked about opening this program to non profit organizations. That is an interesting advantage. In our society, we have witnessed the development of different types of businesses. There are capitalistic type traditional businesses where one entrepreneur starts up the business. But there are also other kinds of businesses such as cooperatives, in Quebec.
For example, some twenty years ago, on the northern shore of Lake Témiscouata, a group of foresters formed a company that belongs to all of them, but from which they do not get individual. This situation combines the advantages of a company with those of a cooperative.
These organizations should be treated with an open mind by the financial institutions they do business with. If a financial institution asks “What sort of organization do you represent? You do not fit in with our institution”. Well, that is not a plus.
At this point in my presentation, I would like to say that this bill is part of a much larger system in which a problem of lack of competition in providing financing was noted. Before any talk of amalgamating banks, we should make sure there is more competition in our communities.
In Canada, and especially in Quebec, banks have already cleaned things up, with some going a long way. So, in some places there is nothing more than the National Bank or a credit union. There is not a lot of enthusiasm for the amalgamation of the big banks, but there is for more services in our regions from the ones that have remained. Their remaining and the fact that they have developed financial products should inspire our confidence.
If they could diversify their product and in so doing provide a lot of opportunities for those needing such financial services, and if legal changes are made, 10, 15 or 20 years from now we could see the emergence of this sort of financial holding and people will say “That is a good thing. There is more and more competition and service opportunities”. This is how progress is made.
It is important to consider the Small Business Loans Act while keeping in mind that there are also other tools available. In that context, the Bloc Quebecois will be pleased to support the bill, even though it would have liked to see its amendments accepted. As we know, we often have to keep trying in this world. A number of arguments were put forward. The main one provides that we must make sure that loans to businesses are not simply granted under a purely mechanical and arithmetical approach. We must be able to include other considerations.
When a person with a good idea comes to get financing, he or she must feel that the financial institution has an open attitude, that it is not only concerned about the guarantee on the loan, and that it provides true advice to achieve the best possible results.
In a few years, we will look to see if, indeed, it might have been possible to give even more leeway to our businesses. This would ensure that everywhere, and particularly in rural areas of Quebec and Canada, we would have the necessary tools to develop quality businesses that are able to go and sell their products all over the world, while also meeting domestic demand.
I hope that once this bill is passed, we will not forget that there is still room for improvement. In the meantime, the changes that have been made will ensure that small businesses are better served.