SMEs are Canada’s Advantage for Prosperity
Supercharging SMEs Across Canada
The return of U.S. tariffs has put Canada’s small businesses on edge—amplifying long-standing issues like high rent, rising insurance costs, and limited support for growth. At the same time, Prime Minister Carney announced he plans to cut $25B from federal spending by 2028.
With the trade and economic environment shifting rapidly, this is a critical moment for the federal government to unlock business growth using efficient policies.
Done wrongly, the government could stunt SME growth – comprising 50% of Canada’s GDP and almost 70% of the workforce.
Done correctly, Carney’s government could improve job numbers, increase entrepreneurship and local asset ownership, boost the Canadian productivity rate, and create a more resilient economy.
Unlocking SME Growth for a More Productive Canada
Almost two-thirds of all Canadians work for a small or medium-sized business employing less than 500 staff.
(Key Small Business Statistics 2024, ISED Canada)
SMEs fuel Canada’s economy and create jobs in every community.
Yet across all our provinces and territories, business owners face mounting pressures from rising commercial rents, insurance, workforce challenges, and economic uncertainty. Their resilience through COVID-19 proves their adaptability, but they have not yet fully recovered – and now they are being dealt another blow.
For them to not only survive – but to continue creating the jobs and revenue that carry half of Canada’s economy – they need a government that responds to their unique needs.
Small businesses compete differently than large corporations – they aren’t little big businesses. When local businesses thrive, they create good jobs, drive innovation, and keep wealth in our communities. Canada’s next government must reduce barriers to competition and ensure balanced, transparent markets are accessible to all entrepreneurs.
Small Business Quick Stats
SME Quick Stats
- Retail Rents Have Surged in Toronto (and other cities) since late 2023 68.5%
- Less than half of Canada’s restaurants are profitable 47%
- Insurance costs are a top-concern for over 2/3rds of businesses 68%
- 1/3rd of businesses are worried about accrued debt & interest rates 33%
If Ottawa wants to boost small business growth, it should:
1) Update policy to make everyday transactions faster and cheaper
2) Lower cost pressures that choke off investment and job creation
3) Design a marketplace that turns marginalized businesses into engines of growth
With heightened market uncertainty, a now-global trade war, and a newly announced $25B federal cost-cutting agenda, Canada’s first priority must be to ensure our domestic marketplace supports business growth and job creation.
Targeted investments in SMEs are one of the most efficient ways to strengthen GDP growth — unlocking underutilized capacity in every region, and generating high returns through local reinvestment, employment, and productivity gains.
In practice, this means helping small and medium-sized businesses access the tools they need to grow. That includes better financing options to buy commercial property or take over businesses from retiring owners — steps that build long-term stability and keep local economies strong. It also means tackling the rising costs that hold businesses back.
These are the barriers that business owners tell us about all the time — the reasons many choose to scale down or shut their doors altogether. It’s a preventable loss of jobs, community assets, and economic momentum. With the right policies, governments can meet fiscal goals while building a more resilient and inclusive economy.
Policy Concepts to Supercharge Canada’s SMEs
With heightened market uncertainty, a now-global trade war, and a newly announced $25B federal cost-cutting agenda, Canada’s first priority must be to ensure our domestic marketplace supports business growth and Good Jobs creation.
Other countries are taking deep action: Singapore’s targeted SME support has strengthened local innovation. South Korea’s Ministry of SMEs and Startups helps businesses scale while keeping ownership local. Community Development Financial Institutions in the U.S. provide targeted lending to small businesses that struggle with traditional bank financing.
Growth Barrier #1:
Commercial Property Ownership is Out of Reach, Locking Businesses into a Cost Spiral
A Federal Mortgage Guarantee Program for SMEs
Rising commercial rents are driving out stable, long-standing businesses — especially in cities like Toronto, where rents have spiked by over 68% in a single year (TRREB). Owning property is one of the strongest ways businesses build long-term stability, yet most small business owners can’t access the financing needed to buy their spaces.
We propose a mortgage guarantor program through the Business Development Bank of Canada (BDC) to help businesses with reliable revenues and rent histories become owners. With government backing, the BDC can offer flexible, low-barrier financing — helping businesses escape the rent cycle, reinvest in growth, and strengthen local economies.
Growth Barrier #2:
Business Transitions Are Failing, Fueling Closures, Job Loss and Consolidation
Overhaul the Ailing Canada Small Business Finance Program into the NextGen Ownership Fund
Canada is facing a once-in-a-generation ownership shift as business owners retire, leaving $1 Trillion in business assets up for grabs and ready for new Canadian ownership.
But many sales are falling through due to lack of affordable financing especially for non-institutional buyers – who otherwise have great management experience and a desire to run a profitable business. This results in business closures, job losses, and more communities losing local anchors to private equity or corporate consolidation.
We propose a federally supported NextGen Ownership Fund that provides affordable financing to help individuals, co-ops, or community groups acquire businesses from retiring owners. Supporting succession keeps businesses alive, jobs intact, and community wealth in circulation — protecting $1 trillion in economic value.
BWA member businesses report that succession planning is their top long-term concern, with many owners planning retirement but unable to find local buyers with adequate financing access.
Growth Barrier #3:
Capital Barriers Are Blocking the Entrepreneurs Who Could Be Powering Growth
Require Inclusive Targets in Federal Financing Programs
Women, newcomers, and racialized entrepreneurs start businesses at high rates but face greater challenges accessing capital. This results in higher debt, greater risk of failure, and fewer opportunities to scale — weakening the very sectors driving new business growth in Canada.
We propose auditing and restructuring federal financing programs to set clear targets for inclusion. Programs should prioritize access for historically excluded business owners — including newcomers, women, and racialized entrepreneurs — to build a stronger, more resilient economy rooted in fairness, innovation, and opportunity.
Growth Barrier #4:
Government Procurement Shuts Out SMEs, Wasting Opportunities to Grow Local Economies
Redesign Procurement to Unlock SME Growth and Economic Value
Government procurement is one of the most powerful tools available to support small and medium-sized businesses — but today’s systems are too complex, opaque, and risk-averse to work for most SMEs. Requirements often favour large firms with in-house legal teams and compliance departments, while local businesses struggle to access even basic opportunities. This is inefficient procurement policy – but it can be easily fixed to unlock SME growth opportunities. When SMEs are excluded from public contracts, we miss out on jobs, local reinvestment, innovation, and regional economic development that could happen without spending a single new dollar.
We propose that federal and provincial governments modernize procurement processes to support SME participation — through clearer eligibility criteria, simplified applications, transparency tools, and carve-outs specifically for small, independently-owned companies. Public money should build public value — and that includes growing Canada’s diverse business ecosystem.
Quotes and Further Info
The Better Way Alliance is Canada’s only national business focused on both policy and marketplace solutions to quickly changing commercial real estate & rental markets.
The Commercial Renter Bill of Rights is a policy idea guide for provincial governments to consider while updating Commercial Tenancy Acts. Commercial renters have zero rights in negotiations, and as the commercial real estate market has consolidated, small business owners are often negotiating against multi-billion dollar companies.
The Bill of Rights offers governments a way to level the playing field and reduce red-tape between tenants and landlords.
“For Ontario’s locally owned businesses, the status quo doesn’t cut it. 2025 is survival or surrender. With trade pressures mounting, we need creative, bold policies that secure our economic future.
There’s no runway left for incremental change. Ontario’s government must adopt bold market and capital measures to secure our local business ecosystem.”
Liliana Camacho, Knowledge Director at the Better Way Alliance
“Ontario can lead the continent in innovation, productivity, and quality job creation in uncertain times. Bold political leadership will ensure an Ontario business ecosystem built to last.
We encourage Ontario’s new government to champion creative & fundamental solutions for locally owned businesses that drive Ontario’s long-term success.”
Aaron Binder, Communications Director at the Better Way Alliance