“We are always customer focused. We are constantly looking at what is our impact and determining if we are really making a difference in ensuring that Canadian SMEs are sustainable in the long term,” says Mary Gagliardi, vice president and district manager for the Ontario south region with BDC.
The seeds of today’s BDC were sown in 1944, when the federal government of the time created the Industrial Development Bank (IDB) as an arm of the Bank of Canada. IDB’s mandate and services continued to evolve over the years to better serve the market. In1995, the federal government identified gaps in financial services available in the market to Canadian small- and medium-sized enterprises (SMEs). In order to better support Canadian SMEs, Parliament passed the Business Development Bank of Canada act creating BDC, a financial institution wholly owned by the federal government.
Today, BDC has 94 locations across Canada and 1,700 employees. It offers an extensive array of financing services, consulting services, subordinate financing, and venture capital for Canadian SMEs, particularly focusing on the emerging and exporting sectors of the economy. According to BDC’s annual report for the fiscal year April 1, 2006 to March 31, 2007, BDC assisted 27,000 Canadian SMEs during the period. At the same time, the institution reported a growth of $571 million or 6.6% in its net loan and investment portfolio in Canadian SMEs to reach a total portfolio of $9.4 billion. Of the 27,000 firms that BDC supported last year, approximately 26% were manufacturers.
“There are a number of gaps (in financial services) that we fill,” says Gagliardi. “For example, one gap is in start-up capacity. Due to our mandate, and the complementary role we play, we do more start-up lending than most financial institutions. As a result, we tend to have a little more risk tolerance when it comes to start-up businesses as well as early-stage companies...when the security is light or non-existent.
“The number one thing for any business, whether it is a manufacturer or any other business, is working capital. With any solution that we provide, we keep an eye to ensuring that working capital preservation is top of mind,” she says.
According to Gagliardi, the three broad areas that BDC provides loans into comprise working capital, real estate and equipment. “Our solutions are tailored to the client. We look at the overall business, understand it, and then create a solution that is customized to the project or the program they are looking at as well as a more long term approach to what their financing needs will be. When we are looking at a business, whether it involves financing or consulting, we are looking at such things as where this business is at, where it has been, where it needs to go, and what solutions do we have internally that can help them.”
Continues Gagliardi, “Every transaction is different. We don’t talk products, we talk solutions. We then tailor the product to fit the solution. For example, if it is a consulting type project and the company is only implementing systems and processes that doesn’t really require equipment then it would be a working capital loan. On the other hand, if there is a equipment and working capital mix then it would likely be an equipment loan. We want to ensure that companies, especially manufacturers, have the systems, technology, and equipment in place to sustain themselves in what is now a global market,” she says.
Another area in which BDC is becoming more actively involved is in transition financing, points out Gagliardi. “Transition financing is an area that we are really focusing in on now because we see that as a factor in the Canadian economy with aging entrepreneurs. As a result, we have built a comprehensive transition program in order to help facilitate the transition of some of these businesses.”
Consulting services is another  key area in which BDC assists Canadian manufacturers. BDC’s consulting services include such things as financial planning advice for start-up companies; helping to create a business plan; evaluating growth potential; assessing, planning, and implementing custom-solutions for international markets, offering a full range of ISO and other quality solutions; and more.
“The consulting services that we offer are as broad as the businesses and their needs. It can be anything from providing an ISO solution to SR&ED tax credit applications to implementing lean manufacturing,” she states.
BDC keeps a close eye on both domestic and global markets and introduces new programs based on the changing needs of the customer base. “We are constantly looking at the products and services that we offer to ensure that they still make sense in the market today. Our core products will probably never see any drastic changes but we are constantly adding things. For example, something we recently introduced is if a company needs consulting services they can apply for a consulting loan at a fixed price that is probably much cheaper than they can get for standard working capital money.“
Gagliardi also singles out BDC’s new Manufacturers Plus program which offers tailored financing and consulting services to SME manufacturers to help them identify problem areas within their operations, assist them in addressing the problems, and help marshal their resources to take competitive action.
bdc.ca