In 2020-21, the Government of Canada continued its commitment to support entrepreneurship and the growth of small and medium-sized enterprises (SMEs).
In the face of the COVID-19 pandemic, the Government acted swiftly to provide support to businesses and offered a broad suite of support measures.
The Canada Emergency Business Account (CEBA) has provided interest-free, partially forgivable loans to more than 850 000 Canadian small businesses. In December 2020, the Government increased the value of the loan from CAD 40 000 to CAD 60 000 to help small businesses bridge to recovery. If a business repays their loans by December 31, 2022, up to a third of the value of their loans (meaning up to CAD 20 000) will be forgiven. In further recognition of the ongoing pandemic, the Government recently extended the application deadline for CEBA to June 30, 2021.
The Business Credit Availability Program (BCAP) is a co-lending and loan guarantee program offering financing to small and medium-sized enterprises. Export Development Canada (EDC) is working with financial institutions to guarantee 80% of new operating credit and cash flow term loans of up to CAD 6.25 million to SMEs. This financing support is to be used for operational expenses and is available to both exporting and non-exporting companies. With the Co-Lending Program for Small and Medium-Sized Enterprises, the Business Development Bank of Canada (BDC) is working with financial institutions to co-lend term loans of up to CAD 12.5 million for businesses operational cash flow requirements.
The Government of Canada also introduced the Highly Affected Sectors Credit Availability Program (HASCAP) which provides businesses heavily impacted by COVID-19, access guaranteed, low-interest loans of CAD 25 000 to CAD 1 million to cover operational cash flow needs. HASCAP is available to businesses that operate in all sectors, including harder hit sectors such as tourism and hospitality, restaurants and those that primarily rely on in-person services. Businesses could benefit from a 4% interest rate and a repayment term of up to 10 years. The BDC has been mandated by the Government of Canada to provide a guarantee to the financial institution for 100% of the value of the loan.
The Canada Emergency Wage Subsidy (CEWS) has helped protect millions of Canadian jobs and supported businesses of every size across Canada through the COVID-19 pandemic. Canadian employer who has seen a drop in revenue during the COVID-19 pandemic, may be eligible for a subsidy to cover up to 75% of an employee’s wages to keep or re-hire workers, help prevent further job losses, and ease businesses back into normal operations. CEWS has helped more than 5.3 million Canadians keep their jobs and provided more than CAD 73 billion in support to the Canadian economy. In Budget 2021, the Government proposed to extend the wage subsidy until September 25, 2021.
The Business Development Bank of Canada (BDC), a crown corporation, has a mandate to support Canadian entrepreneurship, with a particular focus on SMEs. It offers direct lending, growth and transition capital, venture capital, securitization and advisory services. It offers financing products and advisory services that complement those available from private sector providers. It also fulfils a countercyclical role, increasing its support for Canadian entrepreneurs during times of economic turmoil. In response to the COVID-19 pandemic, BDC increased its direct lending activities tenfold by leveraging its online financing platform and new working capital loans. As of fiscal 2020, BDC had CAD 36.5 billion committed to 62 000 clients operating in all industries and located across Canada.
Total venture capital (VC) investment levels in Canada has had over eight straight years of growth reaching CAD 6.2 billion in 2019 before decreasing to CAD 4.1 billion in 2020. These are the highest levels of VC investment recorded in Canada since 2001. This growth has in part been attributed to the successful Government Venture Capital Action Plan policy launched in 2012, the ongoing direct and indirect VC investments placed by the BDC with a VC portfolio of approximately CAD 2.3 billion under management, as well as to a maturing of the Canadian VC industry.
Building on the momentum of VCAP and the original Venture Capital Catalyst Initiative (VCCI), the Government of Canada’s Budget 2021 made CAD 450 million available through a renewed VCCI to support the Canada venture capital ecosystem. It will build a VC portfolio through three streams: large funds-of-funds, an inclusive growth stream, and investments in the life sciences sector. The renewed VCCI should inject more than CAD 1.5 billion into the Canadian innovation capital market by leveraging funds from the public sector and private sector.
The Canada Small Business Financing Program continues to improve access to financing for small businesses. In 2019-20, the programme facilitated almost CAD 1.3 billion in private sector loans to Canadian small businesses. Budget 2021 included an announcement to improve and modernize the programme through amendments to the Canada Small Business Financing Act and its regulations. These amendments are projected to facilitate an increase annual financing by CAD 560 million, supporting approximately 2 900 additional small businesses.
Futurpreneur Canada, a not-for-profit organisation, which provides financing, mentoring, and business support tools to young entrepreneurs, also received CAD 38 million in funding over five years, starting in 2019-20 to continue its support of Canada’s next generation of entrepreneurs. The organisation provides young entrepreneurs between the ages of 18 and 39 up to CAD 20 000 in start-up loans for flexible three-to-five-year terms with compulsory mentoring lasting a minimum of two years. Futurpreneur loan recipients can receive an additional CAD 40 000 in loans from BDC. In 2020, the Government invested an additional CAD 20.1 million in support to allow Futurpreneur Canada to provide financial support for young entrepreneurs facing challenges due to COVID-19.
Supporting women entrepreneurs continues to be one of the key focus areas for the Government of Canada. In 2018, the Government launched the Women Entrepreneurship Strategy (WES), a whole of government approach to support women entrepreneurs over the long term. In Budget 2021, the Government announced a further investment of CAD 146.9 million, bringing total WES investment to nearly CAD 6 billion. This new support will provide affordable financing, increased data, and will strengthen capacity within the entrepreneurship ecosystem. As part of the Strategy, WES partners including Business Development Bank of Canada and Export Development Canada have set ambitious new support targets.
The Government of Canada has made investments of up to CAD 221 million in collaboration with Canadian financial institutions to help thousands of Black business owners and entrepreneurs across the country grow their businesses. The Black Entrepreneurship Program (BEP) has three main components: CAD 53 million for the National Ecosystem Fund to support not-for-profit Black-led business organizations across the country in their capacity to provide support, mentorship, financial planning, and business training for Black entrepreneurs; CAD 6.5 million for the Knowledge hub to conduct research on Black entrepreneurship in Canada and to help identify barriers to success and opportunities for growth; and, the Loan Fund is an investment of CAD 291.3 million (CAD 33.3 million from the Government of Canada, CAD 130 million from BDC, and CAD 128 million from several financial institutions) to support Black business owners and entrepreneurs. The Loan Fund will provide loans of up to CAD 250 000 to Black business owners and entrepreneurs across the country to start, build and grow their businesses. As part of Budget 2021, the Government will invest up to an additional CAD 51.7 million over four years, starting in 2021-22, to add funds to the Ecosystem Fund, so that more supports can be available to Black-led businesses and Black entrepreneurs.
To help simplify and streamline the Government’s support programs, and to help equity deserving entrepreneurs such as, racialized Canadians, young people, LGBTQ2 people, and more, access funding and capital, mentorship, financial planning services, and business training, the Government will launch the Small Business and Entrepreneurship Development program (SBED). SBED is a CAD 101.4 million over 5 years, tool which will facilitate continued support of small businesses and entrepreneurs across Canada. This will help all Canadians have an equal chance to succeed and contribute to economic recovery and growth.
As well, the Government of Canada’s launched Canada’s Export Diversification Strategy in Fall of 2018. In total, the Export Diversification Strategy is a CAD 1.1 billion investment over six years, that aims to help Canadian businesses access new markets and increase Canada’s overseas exports by 50% by 2025. It is focused on investing in infrastructure, providing businesses with resources to execute their export plans and enhancing trade services. As part of this Strategy, the Government is providing CAD 10 million over three years to for export readiness and export capacity building initiatives, delivered in partnership with local organizations to help firms with high export potential to realize new international opportunities. In addition, the Government will provide CAD 50 million over five years to help SMEs explore new export opportunities. The Strategy also includes CAD 100 million over six years towards CanExport and related programs to help SMEs looking to reach new markets overseas. This is in addition to CanExport’s initial CAD 50 million over five years, which was launched in 2016.
Established in 2016, the Trade Commissioner Service’s CanExport provides CAD 33 million per year in grants and contributions to Canadian SMEs, innovators, associations and communities to help them diversify exports and expand their international footprint. In line with Canada’s Trade Export Diversification Strategy, the CanExport funding program seeks not only to diversify where Canada exports, but also who exports. To this end, the program recently launched a dedicated Concierge Service for women and Indigenous entrepreneurs, to encourage more diversity in its applicants and to better support those who have been disproportionately impacted by the COVID-19 crisis. CanExport also allows companies participating in women-focused trade missions organized by Global Affairs Canada to exceptionally submit a project under the CAD 20 000 budget limit for consideration.
In response to COVID-19 export challenges, on November 3, 2020, the CanExport program updated its guidelines to provide more flexible funding, particularly for virtual activities. This has helped companies successfully pivot away from traditional in-person sales strategies to digital platforms.
