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Measures for businesses
La Financière du Québec
A powerful tool for SMEs
SMEs are facing a tighter supply of financing on the market. The problem mainly affects young businesses, businesses in the regions and businesses in the new economy.
The
government is setting up La Financière du Québec
to help SMEs find financing. This new organization is part of
Investissement
Québec, and it replaces Garantie Québec.
La Financière du Québec will serve as an adjunct to financial institutions, while respecting their normal fields of intervention.
- La Financière du Québec will be able to extend loans to businesses. It will no longer essentially provide loan loss guarantees, as Garantie Québec did.
- La Financière du Québec will have the important mandate of providing assistance for the working capital of businesses facing temporary difficulties. The assistance may take the form of a loan or a loan guarantee not exceeding 80% of the net loss.
La Financière du Québec will intervene in those ways in order to maintain the activities and jobs of businesses that have liquidity problems owing to the situation–the impact of the events of September 11, for example. The objective is to grant a total of $100 million in loans or loan guarantees by March 31, 2003.
- La Financière du Québec will use innovative financing formulas, established on a business basis, in order to respond in a flexible and versatile manner to the increasingly diversified needs of SMEs. In particular, the corporation will intervene to provide businesses with "quasi-equity" financing.
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"Quasi-equity" financing
"Quasi-equity" financing is a hybrid form of financing, between venture capital financing and the traditional financing available from financial institutions.
"Quasi-equity" financing consists essentially of a loan–a risk-sharing loan, a subordinated loan or a venture loan–but it has certain features akin to venture capital, such as a moratorium on the repayment of principal or a risk premium.
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- La Financière du Québec will be able to lend immediately to fledgling businesses that are unable to finance themselves because of the economic situation. A $25-million loan envelope has been set aside for that purpose, until March 31, 2003.
- La Financière du Québec can provide cooperatives and businesses in the social economy with capitalization loans and other quasi-equity financial products. A $15-million financial intervention envelope has been placed at the disposal of these businesses. In addition, partial interest payment holidays may be granted, up to a maximum of $1.2 million. These envelopes will be managed jointly with the business clientele contemplated by this measure.
Because of its expertise, La Financière du Québec will be responsible for managing the FAIRE program (Private Investment and Job Creation Promotion Fund).
La Financière du Québec will be operational very quickly, since it is replacing an existing organization, Garantie Québec.
Thanks to its new opportunities for intervention, La Financière du Québec can actually play the role of an investment bank for SMEs, as an adjunct to commercial financial institutions.
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