The federal government will inject $350 million into the Business Development Bank (BDC) in a move meant to spur the extension of credit to small and medium-sized firms, Industry Minister Tony Clement said Monday.

Clement made the announcement in Toronto during an address to the Canadian International Council.

The investment will allow the BDC to provide at least an additional $1.5 billion in financing to help small and medium-sized businesses sustain operations and grow, the government says.

It could mean an immediate injection of funds for over 3700 small and medium-sized businesses, with an average loan amount totalling about $400 000. These funds would help manufacturing, science and technology, construction, tourism, agriculture, forestry and fishing businesses all across Canada.

“Current market developments have resulted in increased demand for BDC financing and services, and the government has taken this action to enable the BDC to help counter the effects of the credit crunch,” Clement said.

The federal government is providing $250 million in immediate funding to the BDC, with another $100 million due once the bank has worked out agreements with other financial institutions to top up lines of credit for small and medium-sized businesses.

The money is expected to lead to financing for between 3,000 and 4,000 businesses across the country.

Clement said the money will be included in the federal budget due due to come down Jan. 27.

IE