Up to $12B to support vehicle and equipment financing Getting Credit to Main Street Canada

TORONTO- The Hon. Jim Flaherty, federal Minister of Finance, announced the creation of the Canadian Secured Credit Facility (CSCF), with an allocation of up to $12 billion to support "the financing of vehicles and equipment for consumers and businesses, large and small."

"This is a very positive commitment from the federal government, an important and innovative step toward jumpstarting funding for vehicle and equipment loans and leases", said David Powell, President of the Canadian Finance & Leasing Association.

When many talk of credit, they often think only of the banks and credit unions. Yet financing for about 25% of small and medium sized business investment in machinery, equipment and commercial vehicles, and for around 40% of consumer vehicles comes from somewhere else - Canada's asset-based finance and leasing industry.

With an estimated $112 billion in financed assets, it's Canada's second largest provider of debt financing after the banks and credit unions. This industry offers financing - at point of sale - supporting a broad network of dealers, manufacturers, distributors, vendors and brokers, and their customers, in hundreds of communities throughout Canada. The auto finance companies finance their franchise dealers and dealer customers to acquire vehicles. Commercial fleet lessors use networks of auto dealers to acquire, maintain and dispose of vehicles for customers in every province.

Equipment financing companies have relationships with manufacturers, vendors, distributors and brokers of all sizes to provide financing for commercial customers (predominantly small and medium-sized businesses) to acquire machinery and equipment - everything from trucks to computer systems, printing presses to bulldozers, machine tools to communications systems and photocopiers.

This industry provides much of the grease for the gears of business and consumers on Main Street.

Despite having been prudent in credit extension, this industry has been caught up in a credit-liquidity crisis that it did not create. The problem: the source of funds has frozen up. As a direct result, consumers and businesses, large and small, looking to obtain credit can't get it.

"This Budget initiative is a win-win for consumers and small business", said Powell. "This is a short-term, low risk, profitable investment for the government. It will pay major dividends. It should get credit flowing back to Main Street and start the move to restore private investor confidence in the commercial markets."