Funding and support announced for business affected by low oil price

The Business Development Bank of Canada (BDC) has announced a new $500 million funding envelope available to help small businesses affected by the decline in oil prices.

The funding is aimed towards businesses in the oil and gas service sector, rather than production or exploration companies.

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The BDC will also offer support in an advisory role to small businesses through its network of consultants in the company's subset, BDC Advantage.

"We are optimistic for the prospects of our small business clients," BDC President and CEO Michael Denham told the Alaska Highway News in an interview.

"With time, support, and the tools we and others can provide we're optimistic that they'll succeed."

The BDC loans will help companies fund their investments and also "give themselves a bit more time to improve their business and make sure they are able to thrive in today's environment," Denham added.

Applications will be looked at on a case-by-case basis.

A key focus will be on helping small businesses diversify and expand their current client base or launch into new industries.

For example, a water treatment business that services the oil and gas industry might benefit from some of the services BDC can offer with an eye towards expanding their business to new industries, Denham said.

"With the financing we provide, this type of client could do a couple of things," he said. "One, it can do the hiring and position itself to sell into a different (market). Two, it can take the financing to adapt its manufacturing process to provide a water treatment capability that an institutional, rather than oil and gas company, would require."

Many small businesses are focused on one or a few clients in the oil and gas sector and the decline in the price of oil has bred a substantial amount of concern, not to mention loss of work.

The situation is made worse by the fact the slow down is also happening across the border in Alberta, and companies from the neighbouring province are finding work wherever they can, including in B.C.

"Small businesses and entrepreneurs (generally) aren't diversified," Denham said. "They have a (single) client or a couple of clients. We suspect they'll take advantage of this to diversify their base and have more clients in the same industry or, even better, make moves into different industries."

How far the $500 million will go is a question some are asking.

Denham said BDC will be keeping a close eye on the demand for the services and loans they are offering, and offer more money if necessary.

"We anticipate change (in the oil and gas services sector) and that's the reason for my underlying sense of optimism as to how the sector will relate to this," Denham said.

"(Service sector businesses) can use this money to diversify out of a sole focus on oil and gas clients, and as a result have more sustainability for the future."

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