Half a billion dollars in loans not reimbursed by businesses

Business Finance

Interest earned is far from offsetting for losses incurred by the state

The Economic Development Fund is under the responsibility of the Ministry of Economy, Science and Innovation, which has been headed by Dominique Anglade since January 2016.

Over the past five years, the Quebec government has lost no less than $ 450 million in loans to businesses that have experienced financial difficulties or have gone bankrupt.

Last year alone, the Economic Development Fund (EDF) had to write off $ 143 million in sunk loans. The average annual loss has been $ 90 million since 2013-2014.

This means that each year, Québec must say goodbye to 5% of the total value of loans granted to businesses.

This write-off rate is significantly higher than that of the government’s financial arm, Investissement Québec, which has reached 2% over the past five years. And it is 10 times higher than that of the Business Development Bank of Canada, a federal Crown corporation. Note that the funding criteria for these two institutions are stricter.

“Many will agree that the government takes a little risk, but it must be worth it. If it’s to fund poorly managed businesses in areas where there is no innovation, it’s throwing money at the water, “says Michel Magnan, Concordia University Professor of Accounting.

Names kept secret

Quebec refuses to disclose the names of companies that have stopped repaying their loans “so as not to cause harm and respect the confidentiality of records,” said a spokesman, Jean-Pierre D’Auteuil.

The interest earned on the loans is far from allowing Quebec to bail out. Last year, the government received $ 93 million in interest, but had to pay $ 82 million in interest on loans it had to make and then lend to businesses.

It must be said that loans totaling $ 677 million were made without interest. This represents almost 40% of the value of all current loans.

In the financial statements of the EDF, which includes all government business assistance, it also states that as of March 31, there were $ 167 million of loans “whose recovery is not reasonably assured.”

Relaxations too

This is in addition to $ 468 million of “restructured” loans, the terms of which have been relaxed due to borrowers’ financial difficulties.

The government must support bold projects in which commercial banks do not want to embark, said Marie-Soleil Tremblay, a professor at the National School of Public Administration. “If we want to stimulate innovation and entrepreneurship, invest only in projects that we know will work, I’m not sure that’s how we will advance much as a society,” insists -t it.

The expert believes, however, like Mr. Magnan, that the government should provide more details on the impact and actual costs of financial assistance to businesses.


  • Total loans: $ 1.7 billion
  • Non-repayable loans before 2024: $ 910 million
  • Interest-free loans: $ 677 million
  • Impaired loans: $ 167 million
  • Outstanding loans: $ 62 million
  • Loss on loans (write-offs) in 2017-2018: $ 143 million
  • Net interest earned on loans in 2017-18: $ 11.7 million
  • Provision for losses: $ 631 million


  • Economic Development Fund, Gouvernement du Québec: 5%
  • Investissement Québec: 2%
  • Business Development Bank of Canada: 0.5%

Source: 2017-2018 financial statements of EDF, IQ and BDC

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