Chapter 12. Canada

Figure 12.1. Structure and performance of the SME sector in Canada
Figure 12.1. Structure and performance of the SME sector in Canada

Sources: A. Statistics Canada, Labour Force Survey; and ISED (Innovation, Science and Economic Development Canada) calculations; https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point2 Source: B. OECD Timely Indicators of Entrepreneurship Database 2018. (http://dx.doi.org/10.1787/sdbs-data-en) Source: C, D. OECD Trade by Enterprise Characteristics Database 2018. (http://dx.doi.org/10.1787/sdbs-data-en). Source: E. OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset. Note: A. Data exclude non-employer enterprises. Size classes are defined as small - 1 to 99 paid employees; medium - 100 to 499 paid employees; and large - 500 or more paid employees.

 StatLink http://dx.doi.org/10.1787/888933925027

SME business conditions and access to strategic resources

Institutional and regulatory framework

Canada’s regulatory environment presents mixed conditions: administrative burdens on start-ups are low, but the cost of starting a business is high. As of 2019, the small business corporate tax rate was reduced to 9%, compared with the standard federal corporate rate of 15%. At the same time, following public consultations in 2017, the federal government introduced measures designed to limit the use of the small business tax regime for tax planning purposes by high-income households.

Market conditions

In 2017, the government launched Innovative Solutions Canada, a new innovation procurement programme designed to support Canadian small businesses. In 2016, the government set up the CanExport programme which, through an initial budget of CAD 50 million over 5 years, provides financial support for a wide range of export marketing activities undertaken by SMEs that intend to export in high-growth emerging markets. The 2018 Fall Economic Statement committed an additional CAD 100 million over six years to CanExport. Through Budget 2018, Canada launched a comprehensive, whole-of-government Women Entrepreneurship Strategy (WES) to help reach the goal of doubling the number of women-owned businesses by 2025. The WES is comprised of a nearly $2-billion investment in programs and initiatives to advance four key action areas: helping women-led businesses grow; increasing access to capital; improving access to federal business innovation programming; and, enhancing data and knowledge. Access of women entrepreneurs to international markets is actively pursued within the frame of the WES through expanded access to export services, export opportunities and export finance.

Infrastructure

ICT investments in Canada are in line with the OECD median. To close the connectivity gap between urban and rural areas, the Broadband Fund of the Canadian Radio-television and Telecommunications Commission will provide up to CAD 750 million over 2019-24 for projects that build or upgrade infrastructure to provide fixed, satellite, and mobile wireless broadband Internet services.

Access to finance

Small business credit conditions have been stable since 2011: the small business interest rate was at 2011 level in 2016 and the small business 90-day loan delinquency rate had returned to pre-recession levels. Venture capital development has been a longstanding priority of the government. After the Venture Capital Action Plan launched in 2013, the Venture Capital Catalyst Initiative, announced in 2017, is investing CAD 400 million in late-stage business development. The Canadian Business Growth Fund, which is supported by Canada’s leading banks and insurance companies, has a national mandate to provide long-term minority capital to entrepreneurs pursuing growth and expansion strategies.

Access to skills

Canada performs among the top OECD countries in education and skills-related indicators, including adult literacy and training. Support for skills training and employment programming has been strengthened, under the amended Labour Market Development Agreements and the introduction of the new Workforce Development Agreements in 2017-18. The government has also launched a Global Skills Strategy, which includes a two-week standard for processing visas and work permits for foreign high-skilled workers coming to Canada on a temporary basis. Futurpreneur Canada, which provides young entrepreneurs financing, mentoring and support tools to start a viable business, received CAD 14 million over 2017-19.

Access to innovation assets

Canada’s R&D spending in relation to GDP is below the OECD average and R&D intensity for mid-sized firms is below the OECD median. The Innovation and Skills Plan, launched by the 2017 federal budget, allocates new funding and resources to its ambitious targets of growing Canada’s exports and clean technology sectors, and doubling the number of high-growth companies in Canada by 2025. The Plan includes a range of initiatives in support of Canadian businesses: Innovation.Canada.ca, an online one-stop-shop for coordinated and client-centric support; the Clean Growth Hub, a whole-of-government focal point for clean tech; the Innovation Superclusters Initiative that supports business-led innovation clusters; and the Accelerated Growth Service that provides high-potential firms with advisory services to access programs and support for growing their business.

The full country profile is available at https://doi.org/10.1787/34907e9c-en

References

Government of Canada (2019), CanExport, http://international.gc.ca/trade-commerce/funding-financement/canexport/.

Government of Canada (2018), CRTC Announces Details of the Broadband Fund, https://www.canada.ca/en/radio-television-telecommunications/news/2018/09/crtc-announces-details-of-the-broadband-fund.html.

Government of Canada (2018), Innovation Superclusters Initiative, https://www.ic.gc.ca/eic/site/093.nsf/eng/home.

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