News Releases
Government Home Search Sitemap Contact Us  

March 22, 2000
(Development and Rural Renewal)

 

New initiatives for assisting small business unveiled

A number of budget initiatives announced today giving greater priority and support to small business development in the province are a direct result of input government received during its public consultations on Jobs and Growth, says Beaton Tulk, Minister of Development and Rural Renewal.

"During the Jobs and Growth consultations, government was repeatedly told that while the small business sector already contributes significantly to the growth and diversification of our economy, it has considerable potential that has yet to be fully tapped, especially in rural Newfoundland and Labrador," said Mr. Tulk, who also chairs the Cabinet Committee on Jobs and Growth.

More than 95 per cent of all business enterprises in Newfoundland and Labrador employ fewer than 50 people � the upper limit most often used in defining small business � and almost 80 per cent of all businesses in the province employ less than five people, according to a recent Statistics Canada report.

Getting access to the necessary business financing and expertise to assist in small business start-ups and expansions was raised as a significant challenge throughout the Jobs and Growth consultations, especially by entrepreneurs in rural areas. Issues that received particular attention included:

- the needs of first-time self-employed entrepreneurs seeking very small amounts of capital; - businesses seeking venture capital to take advantage of expansion opportunities; - the need for patient start-up and expansion equity; - access to resources to help small entrepreneurs properly research and develop their business ideas and seek out markets for their products and services; - the need for business assistance programs to be tailored more effectively to the local needs and circumstances of communities throughout the province; and - the need for �one stop' small business support services that bring together federal, provincial and local agencies at single sites in all areas of the province.

"However, it is important to note that the call for action was not necessarily for more direct government assistance programs. Rather, the call was for government to refocus its current efforts, to examine ways of utilizing the tax system more creatively to stimulate small business development, to evaluate the impact the payroll tax is having on small business growth, and for government to facilitate the ability of small businesses to successfully access capital from commercial and private sources," said Mr. Tulk.

A number of new measures in today's budget were announced as an initial plan of attack on these challenges.

The most significant changes involve greater emphasis being placed on a more stimulative use of the tax system to support private sector led business growth and a refocusing of the Department of Development and Rural Renewal's Strategic Enterprise Development Fund to encourage stronger private investment within small businesses.

Specifically, the Strategic Enterprise Development Fund will be repositioned such that resources are made available to support the following initiatives:

- A significant increase in the payroll tax threshold. The threshold will be raised from $150,000 to $400,000. This will remove approximately 1,300 small businesses from the payroll tax across the province and put more than $6 million back in the hands of these enterprises each year for reinvestment in their businesses. This will help existing small businesses expand and create more employment. It will also address one of the major factors cited by business as an impediment to new small business start-ups. Government has committed to continue on the path of easing the payroll tax burden on business as the province's fiscal situation permits.

- The establishment of a $2 million seed capital equity program in the Department of Development and Rural Renewal. This program will make seed equity of up to $50,000 available, on a matching basis, to new entrepreneurs or existing small businesses seeking expansion opportunities in emerging areas of the economy offering significant growth potential.

- The establishment of a $500,000 Business and Market Development Program in the Department of Development and Rural Renewal. This program will provide new entrepreneurs or expanding small businesses with access to modest resources, on a matching basis, to help them acquire the necessary business expertise to pursue new business ideas and markets for their products or services.

- The introduction of a venture capital tax credit program that will provide investors with a tax incentive to invest in local businesses through provincially managed venture capital pools. This will provide a new source of patient long term capital for small and medium sized businesses in the province. A tax incentive in the order of 15 per cent would raise $6 million in new venture capital for every $1 million in tax incentives provided directly by government. Details on this new program will be announced in the near future following further consultations with the business community and other key stakeholders.

Minister Tulk also noted that the province, in partnership with the federal government through the $81 million post-TAGS economic development agreement, recently announced the following complementary initiatives to support the needs of the small business community in rural areas of the province:

- An expansion to the highly successful Collective Enterprise Development Program. This initiative is delivered by the Newfoundland and Labrador Federation of Cooperatives in partnership with various community-based development organizations throughout the province. It provides micro-loans, ranging from $500 to $5,000, as well as counseling services to very small businesses and self-employed entrepreneurs through membership in cooperatives and business credit groups.

- An investment of $10 million in the 15 Community Business Development Corporations across the province to provide new risk capital for small to medium sized businesses in communities affected by the collapse of the groundfish industry.

- The establishment of a network of "single window" business service centres in each of the 20 economic zones that will bring together federal, provincial and community development organizations in single locations to provide more accessible and streamlined "one-stop" services to the small business sector. An initial $500,000 investment from the post-TAGS economic development agreement has been made to support the network.

"These initiatives represent government's immediate and initial response to the �access to capital' challenge identified by the small business community in the Jobs and Growth consultations," Minister Tulk said. He noted that the Cabinet Committee on Jobs and Growth is examining other possible initiatives to support the needs of the small business sector, including the merits of extending across the province an investor-entrepreneur matching service which is being piloted by the City of Mount Pearl in partnership with Industry Canada. The cabinet committee also intends to pursue discussions with the commercial banking sector and other sources of business capital, including federal development agencies, to facilitate a better flow of capital to the needs of the small business community in the province.

"We are confident that the specific initiatives announced in the budget today will be very powerful tools to help small businesses seize new opportunities and create new jobs throughout the province," concluded Minister Tulk.

Media contact: Josephine Cheeseman, Communications, (709) 729-4570. 

2000 03 22


SearchHomeBack to GovernmentContact Us


All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.
Disclaimer/Copyright/Privacy Statement