MONTREAL—Business Development Canada (BDC) has announced a profit of $357-million, boosted by a decrease in lending to its 29,000 small and-medium sized (SME) clients, indicating credit conditions are improving for Canadian businesses.

BDC says its clients accepted $3.3 billion in financing in fiscal 2011, down from $4.4 billion in 2010 – the most in the bank’s history. It also authorized $95.3 million in venture capital investments, $150 million in asset-backed securities and started 2,300 consulting mandates.

The bank says entrepreneurs’ optimism about their firm’s prospects and business investments gained momentum as the Canadian economy emerged from recession and began a slow, uneven recovery with modest growth, reflecting strong financial positions and easing credit conditions.

But while entrepreneurs shift operational priorities from recession to recovery, companies lacked capital to finance day-to-day activities or longer term projects, according to BDC.

BDC responded with the Economic Recovery Loan program, a pre-approved working capital loan clients used to finance working capital requirements and make other investments. The program attracted more than 3,700 BDC clients.

Canadas business development bank, BDC has more than 1,900 employees and more than 100 business centres across the country. It offers financing, subordinate financing, securitization, venture capital and consulting services to small and medium sized companies.