Prime Minister Justin Trudeau announced Thursday that the government is allocating $4 billion over four years for small and medium-sized businesses to accelerate digitalization in an effort to advance their competitiveness in an increasingly online, borderless economy.
Ottawa is launching the Canadian Digital Adoption Program that will provide loans and grants to 160,000 business owners, giving them capital to, for example, create an online e-commerce platform or acquire technologies to make operations more efficient.
“Today’s announcement is all about empowering small businesses with digital tools so that they can reach their full potential,” Trudeau said at a press conference with Trade Minister Mary Ng.
Adoption of digital technologies and bolstering online presence is becoming increasingly important in a post-pandemic world, where new habits of online shopping and conducting business virtually have become more commonplace. Small and medium-sized businesses employ about four-fifths of the labour force, according to Statistics Canada, making them a vital part of economic prosperity.
There are two streams through which business owners can obtain funding: the Grow Your Business Online or Boost Your Business Technology streams, offered through the Business Development Bank of Canada (BDC). The government and Crown corporation are offering up to $1.4 billion in grants in which businesses can receive microgrants of $2,400 and “youth advisers” to help them implement digital storefronts and e-commerce functions.
Grants will cover 90 per cent of the costs, up to $15,000, of developing a digital adoption plan. Small and medium-sized businesses can also access zero-interest loans of up to $100,000, as well as student placements, which will amount to $2.6 billion from the venture capital bank.
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Increasing a business’ online presence can bring in more sales and adopting digital tools can lower operational costs, a necessity for survival as the Bank of Canada charts a course to tempering inflationary growth. The central bank kicked off its first key rate increase on March 2, bumping the overnight interest rate to 0.5 per cent from the emergency low of 0.25 per cent.
Close to 20 per cent of small businesses reported that they expect sales to decrease over the next six months and reported lower revenues in 2021 compared to 2019, Statistics Canada reported in a March 3 survey.
“We are preparing Canada to be the global leader in the economy of the future and we’re bolstering our country’s long-term growth and competitiveness,” Ng said at the press conference.
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