Vehicle and equipment financing industry praises Flaherty budget



    
            Up to $12B to support vehicle and equipment financing
                     Getting Credit to Main Street Canada
    

    TORONTO, Jan. 27 /CNW Telbec/ - Today, the Hon. Jim Flaherty, federal
Minister of Finance, announced the creation of the Canadian Secured Credit
Facility (CSCF), with an allocation of up to $12 billion to support "the
financing of vehicles and equipment for consumers and businesses, large and
small."
    "This is a very positive commitment from the federal government, an
important and innovative step toward jumpstarting funding for vehicle and
equipment loans and leases", said David Powell, President of the Canadian
Finance & Leasing Association.
    When many talk of credit, they often think only of the banks and credit
unions. Yet financing for about 25% of small and medium sized business
investment in machinery, equipment and commercial vehicles, and for around 40%
of consumer vehicles comes from somewhere else - Canada's asset-based finance
and leasing industry.
    With an estimated $112 billion in financed assets, it's Canada's second
largest provider of debt financing after the banks and credit unions.
    This industry offers financing - at point of sale - supporting a broad
network of dealers, manufacturers, distributors, vendors and brokers, and
their customers, in hundreds of communities throughout Canada.
    The auto finance companies finance their franchise dealers and dealer
customers to acquire vehicles. Commercial fleet lessors use networks of auto
dealers to acquire, maintain and dispose of vehicles for customers in every
province.
    Equipment financing companies have relationships with manufacturers,
vendors, distributors and brokers of all sizes to provide financing for
commercial customers (predominantly small and medium-sized businesses) to
acquire machinery and equipment - everything from trucks to computer systems,
printing presses to bulldozers, machine tools to communications systems and
photocopiers.
    This industry provides much of the grease for the gears of business and
consumers on Main Street.
    Despite having been prudent in credit extension, this industry has been
caught up in a credit-liquidity crisis that it did not create. The problem:
the source of funds has frozen up. As a direct result, consumers and
businesses, large and small, looking to obtain credit can't get it.
    "This Budget initiative is a win-win for consumers and small business",
said Powell. "This is a short-term, low risk, profitable investment for the
government. It will pay major dividends. It should get credit flowing back to
Main Street and start the move to restore private investor confidence in the
commercial markets."

    The Canadian Finance & Leasing Association (CFLA)

    The 230 members of the CFLA are active in the asset-based financing,
equipment and vehicle leasing industry in Canada. Members range from large
multinationals to national and regional domestic companies, crossing the
financial services spectrum from manufacturers' finance companies and
independent leasing companies, to banks, insurance companies, and suppliers to
the industry.
    For more information: www.cfla-acfl.ca

    
    Relevant Extract from the Federal Budget 2009

    According to the Budget(1),

    "the Government will create the Canadian Secured Credit Facility, with an
    allocation of up to $12 billion, to purchase term asset-based securities
    (ABS) backed by loans and leases on vehicles and equipment. The facility
    will be run under high standards for transparency and credit enhancement
    to protect the taxpayer. This facility will be priced on commercial
    terms, and will therefore be expected to generate a positive return for
    the Government.

    Federally regulated financial institutions are eligible to sell into the
    facility and provincially regulated financial institutions may be
    eligible on the approval of the Minister of Finance.  Other firms
    interested in the facility must work with the Office of the
    Superintendent of Financial Institutions to establish a plan to become
    subject to federal regulation."

    (1) The key sections of the federal Budget dealing with this question can
        be found in Chapter 3, pages 77-79 and page 83.
    




For further information:

For further information: David Powell, President & CEO, Canadian Finance
& Leasing Association, (416) 860-1133, ext 24, david.powell@cfla-acfl.ca

Organization Profile

CANADIAN FINANCE & LEASING ASSOCIATION

More on this organization

FEDERAL BUDGET 2009

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890