The Business Development Bank of Canada (BDC) is committing $100 million to business loans for the half-million entrepreneurs living in rural and remote areas of Canada.
The Crown corporation, whose sole shareholder is the Canadian government, has partnered with a federally funded network of economic development organizations to increase the financing and resources available to small business owners.
“It is tough for young businesses to get financing; it’s tough in the tech sector and it’s even tougher when you’re in a remote, rural area.”
Miguel Barrieras, BDC
The Community Futures network of 267 offices provides business development services, loans, and financing to small and medium-sized businesses. The Québec-based offices are known as the Réseau de SADC et CAE, while entrepreneurs in Atlantic Canada access support through the Community Business Development Corporation. Altogether, Community Futures says it has loaned more than $6.3 million to 135,000 businesses and helped create nearly 800,000 job opportunities with funding from Canada’s regional development agencies.
The new envelope builds on BDC’s Community Banking initiative, an effort launched in November to boost Canada’s entrepreneurship rate. The development bank claims the money will help generate up to $250 million in gross domestic product over five years and fulfill its mandate of serving people outside of major cities.
BDC’s mandate is to support Canadian entrepreneurship, with a focus on small and medium-sized businesses, and operate as a complementary player in the market. The bank provides loans and equity funding through its investment arm, BDC Capital, and advisory services to companies and funds across the country.
Miguel Barrieras, BDC chief impact and community banking officer, said in an interview with BetaKit that the initiative aims to reach more entrepreneurs in underserved regions of Canada. He claimed that rural populations tend to have a higher share of entrepreneurs compared to urban ones.
“The complementarity of our common reach…makes it so much stronger and will allow us to reach a lot more entrepreneurs who have historically had fewer alternatives,” Barrieras said.
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Barrieras said the $100 million will augment the Community Futures offices’ loan capacity and, in some cases, allow them to double loan amounts from $250,000 to $500,000. The development bank is also providing Community Futures with advisory services and resource materials, such as information on how best to use artificial intelligence (AI) or tips on cybersecurity.
Though the initiative is not being run through BDC’s venture capital (VC) arm, Barrieras said the debt financing opportunities can still benefit early-stage startups, particularly for their first “break” of capital.
“It is tough for young businesses to get financing; it’s tough in the tech sector and it’s even tougher when you’re in a remote, rural area,” Barrieras said. Obtaining further financing will be easier as these companies “will have proven themselves” by securing loan opportunities, he claimed.
The early-stage venture financing landscape in Canada has been on the downturn, particularly amid economic uncertainty due to an ongoing trade war, making it challenging for some startups to access seed financing. Companies building in AI and software have largely been insulated from the trend, while those in healthtech and hardware have struggled.
In a statement, Minister of Industry Mélanie Joly said the initiative leverages the “complementary strengths” of BDC’s financing and advising expertise, combined with the Community Futures network’s community ties.
The initiative is different from BDC’s Accelerator Loan Program, which seeks to guarantee up to $800 million in loans to entrepreneurs provided by partner financial institutions. Through this program, the debt financing will be a 50-50 split between BDC and the Community Futures office, with “competitive” loan terms.
Barrieras claimed that this makes the financing experience more “friendly” for entrepreneurs, who will deal with the economic development offices in their communities. As part of its larger Community Banking initiative, BDC committed $100 million in June to guarantee loans issued by the majority Indigenous-owned First Nations Bank of Canada to Indigenous organizations buying Canadian businesses from retiring owners. More recently, the development bank pledged $50 million for a similar initiative to help women entrepreneurs acquire businesses.
Feature image courtesy Madison McLauchlan for BetaKit.