The Business Development Bank of Canada is ramping up efforts to help Canadian businesses exploit the cheap dollar and regain lost market share in the United States.
"We have to fight back to regain the market share we lost in manufacturing, particularly in the U.S.," said Michael Denham, 51, chief executive officer of the BDC, the federal government's small-business lender. "The potential is there, but it's not going to be easy."
Canada's share of the U.S. import market tumbled to 11 per cent last year from more than 16 per cent in 2004, Mr. Denham pointed out in an interview.
Now, however, Canadian exporters have a "clear cost advantage" with the dollar in the high 60-cent (U.S.) to 70-cent range, he said.
"Our hope would be that companies start to source in Canada to extend the benefit of that exchange rate," said Mr. Denham, who joined the BDC in August after a career as a management consultant and stints as a senior executive at Bombardier Inc. and AquaTerra Corp.
Mr. Denham said he's making the low-dollar pitch directly to business owners at every opportunity, and has directed BDC loan officers to help borrowers "take the risk" out of exporting.
"I'm certainly talking it up," he said.
Unfortunately, relatively few small- and medium-sized companies are willing to take risks and invest. The BDC is releasing a survey next week that shows that just 10 per cent of Canadian companies account for three-quarters of planned investments.
The BDC, which specializes in financing for businesses unable to get traditional bank loans, has 40,000 customers and a loan portfolio of roughly $20-billion (Canadian). It is also the country's largest provider of venture capital.
The BDC is feeling the effect of the collapse in the price of oil. But so far, its loan portfolio has not been affected outside the oil and gas sector.
"We're not seeing a lot of bleeding from oil and gas into other sectors right now," Mr. Denham said. "We've got 2,000 people in offices from Whitehorse to Saint John's. So I do feel we're in touch with entrepreneurs."
He acknowledged that the economy is weak outside the oil patch, but at least there is growth.
"A lot of the indicators are tepid, but headed in the right direction, particularly in Quebec and Ontario," he said.
The good news is that demand for BDC financing remains strong, growing from 5 to 10 per in the past year, depending on the region, according to Mr. Denham.
Last fall, the BDC earmarked $500-million in additional financing for companies hit by the oil slump. Much of that money, aimed at helping companies diversify, has been deployed, prompting the bank to consider boosting the fund.
"There is more drawdown than we would have predicted, and if things continue over the course of the next year, we'll really have to look hard at increasing the size of this envelope," he said.
The bank's oil patch clients are typically service companies, such as maintenance, warehousing and hospitality businesses.
According to Mr. Denham, the bank's portfolio has seen only "modest" losses since the oil price collapse, but said that could deteriorate.
"We're monitoring [the situation] every week and every month, and so far the loan book is maintaining its quality," he said. "By and large our clients are still finding ways to stay current on their obligations."