Building partnerships
1985 was a banner year for FBDB, marking its 40th anniversary and a return to financial health. After sustaining significant losses in previous fiscal years, the organization stemmed its losses and substantially increased its volume of loan authorizations.
Strict control of operating expenses, an economic growth rate of 4.7% and relatively stable interest rates allowed FBDB to recover from the worst recession in fifty years and return to profitability. The administration and the branch network structures were reorganized, and Financial Services staff was reduced to 900 from over 1,200.
Attentive to new challenges
FBDB began to adapt to rapidly evolving markets, in the context of uncertain economic conditions and major trends like globalization, computerization and innovation. Entrepreneurial profiles changed along with Canadian society. FBDB followed suit by creating new services adapted to the ever more complex needs of business owners and the special challenges facing the "non traditional "new entrepreneurs: women, members of ethno-cultural communities, aboriginals and young entrepreneurs.
Many of these services supported one of FBDB's main objectives at the time, which was to encourage the creation of partnerships with the public and private sectors, while maximizing its unique role. Thus, a new financial planning program was implemented in 1985, in conjunction with private sector financing sources. This program involved introducing investors to people looking for financing, preparing loan applications and identifying intermediaries, and publishing self-help guides for business and strategic planning services.
In 1986, FBDB took over the Student Business Loans Program which had been under Employment and Immigration Canada. During the 1988 fiscal year, FBDB created six regional consultative committees made up of local business people in order to respond to the specific needs of business in different communities. In conjunction with the Export Development Corporation, it also launched a program to finance overseas accounts receivable, making it possible to offer guarantees for increased lines of credit granted to exporters by their bank.
In fiscal 1991, FBDB created the Cultural Industries Development Fund which grew to $33 million and was administered in close co-operation with Heritage Canada (called Communications Canada). The fund’s mandate was to provide financial support to businesses in the fields of book and magazine publishing, film and video production, and sound recording. The following year, FBDB launched the Venture Loans Program which combined characteristics of term loans and venture capital. The program targeted businesses with strong growth potential and an experienced management team but with few guarantees to offer term lenders.
During fiscal 1994, FBDB made a Growth Fund of $50 million available to entrepreneurs wanting to finance expansion of their businesses. The fund allowed FBDB to propose term loans for financing cash flow, with a maximum value of $100,000 and a flexible repayment plan. These amounts were offered in addition to lines of credit granted by other financial institutions. FBDB also concluded an agreement with the Toronto Dominion Bank which allowed TD Bank to refer its clients to FBDB's CASE program (which offered business management assistance).
Innovative management counselling services
FDBD’s Management Counselling Services also required innovation during this period. In 1985, the Automated Information for Management Program (AIM) was created. It supplied on-line information on different government programs, which until then had been manually compiled and consulted. The following year, The Women in Management seminar, designed for women who manage or start their own businesses was launched. Documentation aimed at investors wishing to emigrate to Canada was published in five languages and distributed throughout Canadian embassies and consulates.
In 1987, the Community Business Initiatives Program (CBI) took shape, offering training and personalized consulting for groups of business people from smaller municipalities. In 1993, a new program called Managing the Present... Planning the Future was offered to owners and managers of family businesses, their heirs and eventual successors, to help them with their succession plan. A new self-help financial guide, A Business Plan with a Future, was published; it presented the major points of a business plan along with the required forms on a diskette.
In 1994, a new training program about exporting and ISO 9000 Quality Standards was launched to help Small Business adapt to the changes associated with competition and technology.
While developing these products and services, among the most innovative in the country, FBDB recognized the usefulness of maintaining close relations with its partners in the public and private sectors. FBDB explored a number of new avenues: taking part in financial projects with other lenders; administering programs for federal departments; and creating partnerships with business and community groups to offer programs to entrepreneurs in diverse locations.
FBDB adapts to a profoundly changing economic context
Between 1985 and 1994, FBDB demonstrated its competence, professionalism and capacity to react and adapt to a profoundly changing economic context. At this point, job creation was the government's first priority. The general trend was toward the globalization of markets and competition.
Moreover, environmental concerns gained importance for the government, business and society in general. In 1991, FBDB developed its own environmental guidelines in order to ensure that its activities respected the environment. These guidelines would henceforth apply to all agreements between FBDB and its clients.
In 1991, another recession occurred although not as severe as the early 1980s. FBDB felt its effects, as did its clients. Loan activity decreased as businesses cancelled or reduced their investments. However, the organization's balance sheet and financial viability remained sound.
In 1992, the Canadian economy emerged from the recession; the recovery was real, albeit moderate, and slower than following the previous recession. Investments in business expansion projects were deferred. Venture capital companies evaluated and redirected their market exposure; some even ceased operations. FBDB's Venture Capital Division (new name of the Investment Banking Division since 1987) remained one of the main sources of venture capital at the national level. The new economy became a topic of conversation and investments moved to high tech companies.