The IPL newsletter: Volume 24, Issue 497

Innovation, Science and Economic Development Canada
The Business Development Bank of Canada (BDC) is a financial Crown corporation wholly-owned by the Government of Canada that provides support to small and medium-sized enterprises (SMEs) and entrepreneurs. The Business Development Bank of Canada Act (BDC Act), which governs the BDC, requires that a review of the legislation be conducted on a regular basis. Covering the period from 2010 to 2022, Innovation, Science and Economic Development Canada (ISED) led a review to evaluate the provisions and operations of the BDC Act, as well as examine how the mandate of the BDC has changed and could evolve to support the needs of SMEs across Canada over the coming decade.

Between December 2022 and March 2023, ISED convened 20 roundtable discussions (virtual and in-person across Canada) and received 45 written submissions.  Evidence-based research and analysis was conducted by ISED and other external researchers.

Performance Highlights included

• increasing total assets significantly from $17.7 billion in 2010 to $41.6 billion in 2022

• increasing the number of direct and indirect clients served from 29,000 to 95,000;

• extending over $75 billion in loans and investments to entrepreneurs;

• delivering close to 25,000 advisory mandates (which represent distinct advisory products or services provided to entrepreneurs at a specific point in time);

• supporting the growth of the venture capital ecosystem, including by supporting Government of Canada programming; 

• working with over 150 partners (as of 2022) to extend its reach to SMEs;

• broadening its support to SMEs in underserved markets, including equity-deserving groups through targeted initiatives;

• enhancing client service through the launch of its online financing platform; and,

• delivering on key Government of Canada initiatives such as the provision of pandemic-relief to SMEs to address the COVID-19 pandemic, including the extension of approximately $7.8 billion through the Highly Affected Sectors Credit Availability Program (HASCAP), the Business Credit Availability Program (BCAP), and other measures.

The report included four forward-looking recommendations:

1. Strengthen accessibility and visibility: The BDC should increase the impact of its support for equity-deserving groups and underserved market segments such as newcomers, Indigenous entrepreneurs, and rural communities. The BDC should also enhance its offerings by expanding and clarifying eligibility requirements, and streamlining loan applications and other processes.

2. Improve reach across Canada: Recognizing that its activities are largely concentrated in the Quebec and Ontario regions, the BDC should strengthen its presence and engagement across Canada, particularly in the Prairie and Atlantic regions, through expanded partnerships and awareness-building initiatives to better support SMEs, including those in rural communities.

3. Reinforce collaboration and complementarity: The BDC should further improve its partnerships with stakeholders, including regional players. Further, enhanced cooperation with partners across the SME ecosystem is needed to ensure complementarity with private sector financial institutions, address market gaps for underserved market segments, and bolster alignment across Government of Canada initiatives.

4. Increase data cooperation and refine risk appetite: To continue to improve collaboration, transparency and accountability, the BDC should enhance its reporting and data-sharing practices with stakeholders and its shareholder. This should include the improvement of existing data collection and disclosure practices, in addition to the establishment of information-sharing arrangements with ecosystem partners. Further, the BDC should review its risk appetite to better support equity-deserving groups, undeserved regions and sectors, and newer businesses.