VC division makes up almost half of BDC’s $218 million net loss for 2020 fiscal year, amid COVID-19 volatility

The Business Development Bank of Canada (BDC) doled out $7.4 billion in loans in the fiscal year 2020, an increase of 2.5 percent over the previous year; bringing the organization’s total capital committed to small and medium-sized businesses to $36.5 billion.

“The pandemic created an all-hands-on-deck moment to support thousands of entrepreneurs.”

Last week, the Crown corporation released its financial results for the period of April 1, 2019, to March 31, 2020. The results found BDC supported 62,000 SMBs during the fiscal year, noting that the year ended with the start of the COVID-19 pandemic, which it said led to an “abrupt change in priorities” for the organization.

“As we look back at fiscal 2020, we can say that it was quite a year, which started with ambitious goals to grow Canadian businesses, continued with BDC’s 75th-anniversary celebrations and ended brusquely with the COVID-19 pandemic,” said Michael Denham, president and CEO of BDC. “In a very short period, we pivoted our operations to provide additional liquidity and advice to help entrepreneurs face economic challenges.”

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In response to the pandemic, BDC offered working capital loans, bridge financing for venture-backed companies, a co-lending program for small businesses, and mid-market financing programming to medium-sized enterprises, among other support measures during the crisis.

BDC incurred a total net loss of $218 million for the 2020 fiscal year, although the organization noted without the impact of COVID-19 in March, its net income would have exceeded the objective forecasted in its corporate plan.

Due to the pandemic, BDC said it had to considerably increase its provisions on expected credit losses for loans. The provision for expected credit losses for loans was $772.5 million, compared to $179.9 million the previous year, an increase of $592.6 million.

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BDC’s venture capital (VC) division recorded a net loss of $102 million for fiscal 2020, compared to a net income of $194.2 million recorded last year. The organization said its financial results for VC were “unfavourably impacted by the Coronavirus crisis,” as well as market uncertainty and volatility.

BDC’s venture capital division recorded a net loss of $102.0 million for the fiscal year 2020.

Despite the loss, BDC reported its VC division experienced a record year in terms of proceeds received from divestiture investments, earning $431 million compared to $125 million in 2019.

BDC’s growth and transition capital financing increased by 19 percent compared to last year, which it said reflects “strong demand” across high-growth companies for customized financing solutions. Its advisory services division also saw a 14 percent increase in net contracts signed, compared to last year.

Nearly $1.1 billion was approved in financing for majority women-owned companies, BDC reported, which surpasses its lending target to date. That goal, set two years ago, was to provide $1.4 billion in financing by 2021.

“Looking back at fiscal 2020 and more specifically at the last few weeks of our fiscal year, I am really thankful to our 2,400 employees for their extraordinary effort and mobilization,” said Denham. “The pandemic created an all-hands-on-deck moment to support thousands of entrepreneurs.”

“We have been impressed by the hard work and resilience they’ve shown and continue to show. BDC will continue to be there for them through the recovery, with the financing and advice they need to rebuild their businesses,” he added.

Image source Collision Conference via Flickr

Isabelle Kirkwood

Isabelle Kirkwood

Writer, globetrotter, drone pilot & David Attenborough enthusiast