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In 1996 the federal government commissioned the Task Force on the Future of the Canadian Financial Services Sector (the MacKay Task Force) to examine public policies affecting the financial services sector. As a small part of a much wider mandate, the government asked the Task Force to make recommendations relating to the financing of SMEs.
In late 1998, the MacKay Task Force issued its report which responded in detail to the rest of its mandate, but concluded with regard to the financing of SMES that there was insufficient data available for them to be able to make any recommendations. In light of this, the Task Force recommended that the government make a concerted effort to improve the quality and the quantity of information on SME financing, covering all financial service providers as well as SMEs themselves.
In June, 1999 the government responded to the report of the Task Force. As a part of this response, the government accepted this recommendation and mandated Industry Canada, the Department of Finance and Statistics Canada to work together to gather data on SME financing and report on regularly to the House of Commons Industry Committee ion the state of SME financing in Canada. To this end these government organizations have formed a partnership to design and implement the SME Financing Data Initiative (SME FDI) and have committed resources to establish this data collection regime. Through this Initiative, other research and analysis they plan to provide a comprehensive picture of SME financing, covering the entire spectrum of financing products and services.
Prior to the SME Financing Data Initiative, data collection on small business financing consisted mainly of reports of various industry groups and Statistics Canada labour force and industry surveys. For example, since 1995 the Canadian Bankers Association (CBA) has published statistics on the SME lending activities of the major chartered banks. In addition, the Canadian Venture Capital Association (CVCA) and the Canadian Finance and Leasing Association (CFLA), have provided regular reports on the activities of their members in financing SMEs. The Canadian Federation of Independent Business (CFIB) has also administered regular surveys of its members to determine their perceptions and experience with respect to the availability of credit.
Although these efforts have resulted in substantial progress in the collection of data on small business financing, they shared no single conceptual framework through which to observe the overall state of SME financing in Canada. As a result, critics, including the MacKay Task Force have raised issues of comparability between data sources, lack of coverage for all significant providers of financing, and the possibility of bias in the analysis and reporting of results. All of this pointed to the need for consistent, comprehensive and impartial SME finance data collection.