Capital Leasing Pilot Project

An Invitation to Participate in Capital Leasing

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Invitation

Industry Canada is launching a five-year pilot project to test the viability and impact of sharing the risks of including equipment capital leases under the Canada Small Business Financing Act (CSBFA). The CSBFA currently covers term lending and is delivered in partnership with Canada's network of lending institutions.

We are inviting Canada's commercial lessors to consider participation in this pilot project. If the project proves successful, it will become a permanent part of the CSBFA and a critical element in the financing of small and medium-sized businesses (SMBs) in Canada.

Your participation will:

• allow you to reach a new, dynamic market segment; and
• help you to build business relationships with new clients.

A Win-Win-Win Opportunity

This pilot project benefits the leasing community, SMEs and Canadians.

• Leasing Community
  With shared risk, eligible lessors broaden their opportunities for attracting clients and meeting the needs of emerging businesses.

• SMEs
  SMEs benefit from access to financing for the leasing of equipment - an option they may not otherwise be eligible for.

• Canadians
  Businesses can grow and create jobs with the assistance of this cost-recoverable pilot project - and, in the process, help to build a more dynamic Canadian economy.

Building on Success

More than 17 000 CSBFA loans totalling $1.35 billion were made in 1999-2000 by some 1500 lenders across Canada.

The CSBFA Capital Leasing Pilot Project is designed to build on this success. Through it, we hope to ensure that capital leasing is accessible to more SMEs - especially new and younger businesses.

Working Together

Industry Canada establishes the parameters for the pilot project.

It guarantees up to 85 percent of the lessor's eligible losses on capital leases in the event of default.

It measures pilot project performance and reports on results.

Participating lessors provide and administer capital leases to eligible SMEs. The CSBFA is a unique program, with streamlined administrative procedures. For example, no prior approval from Industry Canada is required for an accepted lessor to make a lease. Lessors must:

• apply their usual standards of credit-worthiness, with adjusted risk profile to reflect the target of younger, smaller firms;
• regularly report a few key program statistics; and
• collect and remit fees that are built into lease contracts to Industry Canada.

How the Pilot Project Works

• Step One: Getting Involved
  1. Interested lessors complete the enclosed form confirming their interest, and fax or mail it to Industry Canada.
  2. Industry Canada assesses the eligibility of each lessor's application.
  3. Lessors receive written acceptance with training kits and prepare for the project launch.
     
  
  
• Step Two: Project Launch

  Participating lessors provide capital leases under the pilot project regulations.

• Step Three: Lease Registration/Fee Submission

  Participating lessors register capital leases, collect the required fees from their clients and submit them to Industry Canada.

• Step Four: Claims for Losses

  In the event of default on a capital lease, the lessor submits a claim for eligible losses to Industry Canada within 36 months of the default date. Industry Canada reviews the claim and pays the lessor 85 percent of the confirmed eligible losses.

Are you eligible to be a lessor under the CSBFA Capital Leasing Pilot Project?

A lessor must be one of the following:

• a member of the Canadian Payments Association*;
• a leasing company that is incorporated in Canada and maintains a rating of BBB or better, issued by a Canadian bond rating agency;
• a leasing company that is incorporated in Canada and participates in a securitization program approved by a Canadian bond rating agency; or
• designated by the Minister of Industry in accordance with the CSBFA Lessor Designation Policy. For more information, contact Industry Canada.

Which clients are eligible?

Small and medium-sized for-profit Canadian businesses can obtain a CSBFA capital lease from an accepted lessor provided their estimated annual gross revenues do not exceed $5 million. Farming, charitable and religious enterprises are not eligible.

Which leases are eligible?

Capital leases must be for new or used equipment necessary in the operation of the SME. Each SME can access a maximum of $250 000 - the aggregate of all CSBFA loans, pilot project capital leases, plus loans under the Small Business Loans Act, extended to that borrower or related borrowers. The level of financing cannot exceed 100 percent of the cost of the equipment.

For More Information

Capital Leasing Pilot Project
Canada Small Business Financing Administration
Industry Canada

Tel.: (613) 954-5540
Fax: (613) 952-0290
E-mail: csbfa-lfpec@ic.gc.ca

Confirmation of Interest

Fax or mail the following information to:

Capital Leasing Pilot Project
Canada Small Business Financing Administration
Industry Canada
235 Queen Street
Ottawa ON K1A 0H5
Tel: (613) 954-5540
Fax: (613) 952-0290

We are interested in participating in this pilot project and would like more information.
Our company: (Please specify where applicable)

• is a member of the Canadian Payments Association
• holds a rating of BBB or better
• participates in a securitization program
• wants to be designated by the Minister of Industry.

Organization Title

Address

Transit No.(if applicable)

Contact Person

Address (if different)

Tel.

Fax

e-mail

• Automobiles
• Trucks, trailers, buses, etc.
• Construction
• Hotel and restaurant
• Materials handling
• Mining and petroleum
• Office furniture and fixtures
• Store furniture and fixtures
• Computers (hardware, software)
• Forestry
• Manufacturing
• Medical/health
• Ships and water vessels
• Telecommunications
• All of the above
• Other (please specify):

• British Columbia
• Alberta
• Saskatchewan
• Manitoba
• Ontario
• Quebec
• New Brunswick
• Nova Scotia
• Prince Edward Island
• Yukon
• Northwest Territories
• Nunavut

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For a print copy of this publication, please contact:

Information Distribution Centre
Communications and Marketing Branch
Industry Canada
Room 268D, West Tower
235 Queen Street
Ottawa ON K1A 0H5

Tel.: (613) 947-7466
Fax: (613) 954-6436
E-mail: publications@ic.gc.ca

Permission to Reproduce: Except as otherwise specifically noted, the information in this publication may be reproduced, in part or in whole and by any means, without charge or further permission from Industry Canada, provided that due diligence is exercised in ensuring the accuracy of the information reproduced; that Industry Canada is identified as the source institution; and that the reproduction is not represented as an official version of the information reproduced, nor as having been made in affiliation with, or with the endorsement of, Industry Canada.

For permission to reproduce the information in this publication for commercial redistribution, please e-mail: Copyright.Droitsdauteur@pwgsc.gc.ca

Cat. No. C2-552/2001
ISBN 0-662-65580-X
53366B