Abstract
This paper investigates the economic impact of the Canada Small Business Financing Program (CSBFP) using the 2004 edition of the Survey on Financing of Small and Medium Enterprises. To avoid the usual self-selection problem associated with voluntary participation in such programs, the financing behavior of the business and its intention to grow are used as control variables. Based on this analysis, participation in the CSBFP would have increased growth in salary, employment and revenues by 12, 12, and 7 percentage points, respectively, between 2004 and 2006. Furthermore, CSBFP would have induced around 5,000 jobs, approximately 3.8% of those created in that time span by small private businesses.
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Notes
A newer unpublished report estimates the incrementality at 85% in 2007.
In 2009, this amount was increased to $350,000 for equipment or leasehold equipment and up to $500,000 for real property.
Statistics Canada chose 34,363 SMEs from the Canadian Business Registry. Of these 21,710 could be contacted, and 13,042 agreed to complete the phone interview and allowed Statistic Canada to share the information with Industry Canada.
For more information on this survey, see the following website: http://www.sme-fdi.gc.ca/eic/site/sme_fdi-prf_pme.nsf/eng/01561.html.
Up to 2010, the cohort has cost $28.1 millions. The program costs in this equation exclude the salary and operating expenses for the program.
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Acknowledgments
The author wishes to thank the two anonymous reviewers, Allan Riding, Adele Deschamps, Derek Gowan, Katherine Clubine, Owen Jung and Richard Archambault for helpful comments. Any remaining mistakes are the sole responsibility of the author.
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Chandler, V. The economic impact of the Canada small business financing program. Small Bus Econ 39, 253–264 (2012). https://doi.org/10.1007/s11187-010-9302-7
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DOI: https://doi.org/10.1007/s11187-010-9302-7