By Jill McCubbin

Government-driven economic stimulus strategies are vastly different from one side of the Canada/U.S. border, with Canadian innovators at a distinct advantage.

In Canada, government stimulus packages ensure money goes to several programs that directly fund small business innovation – a sensible choice because, in this country, just over 5.1 million employees, or 48% of the total private sector labour force, work for small enterprises (those with fewer than 100 employees) and over 6.8 million (64%) are employed by small to mid-sized business, according to Industry Canada small business statistics.

Meanwhile, in the U.S., small business – defined as firms with less than 20 employees – also drive the economy. They are responsible for more than 97% of all net new jobs (reported by the U.S Census Bureau and an Inc.com article here), yet they are not seeing much stimulus money.

As recently reported by Bloomberg’s Catherine Dodge, the U.S. government is now funneling $29 Billion (from President Barack Obama’s $787 billion total economic stimulus package) to state and local governments, but 90% of this money is being used to maintain benefits under Medicaid, the government health-care plan for low-income Americans, and to shore up education programs. There is precious little set aside for the innovation economy, save a few platitudes in political speeches.

U.S. House Majority Leader, Steny Hoyer has even entertained the possibility of a second U.S. economic stimulus program – to generate new jobs and not just deal with, as a report from the Committee on Oversight and Government Reform summarized, “stabilizing state budgets and coping with fiscal stresses.”

A few programs stimulating small business and technological growth in Canada in 2009 are:

  • National Research Council Industrial Research Assistance Program (NRC-IRAP) – This program provides non-repayable contributions to Canadian SMEs interested in growing by using technology to commercialize services, products and processes in Canadian and international markets. As of July 2009, the Government of Canada's Economic Action Plan has provided new resources of $200 million over the next two years to bolster NRC-IRAP support for innovative Canadian firms.
  • The $205 million Ontario Venture Capital Fund is a joint initiative between the Government of Ontario and leading institutional investors. A June 2009 announcement celebrates a $1.8 million investment in the Series B financing of I Love Rewards, an Ontario web-based provider of employee rewards and recognition, sales incentive and service award programs.
  • Ontario Centres of Excellence Investment Accelerator Fund (OCE IAF) The Investment Accelerator Fund (IAF) is a $27.5 million seed fund that finances eligible knowledge-based companies in the early stages of technology development and commercialization. OCE IAF supported the launch of 38 technology companies in 2007-08, a 100 per cent increase over the previous year. OCE also announced $450 million in follow-on investments to its portfolio to date.

On top of this, the Canadian Federal Government has funneled money into both the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to both finance business expansion and international trade. An example is the Business Credit Availability Program (BCAP), which improves access to financing for Canadian businesses during this period of economic uncertainty. Through this program, EDC and BDC will provide at least $5 billion in additional loans and other forms of credit support and enhancement at market rates to businesses with viable business models.

Several of market2world’s clients are taking advantage of these programs now, and we can attest that they are encountering few of the “traditional” roadblocks to accessing government funds. The Canadian government, thankfully, is both more serious and effective at making stimulus spending work than its U.S. counterpart.

(Jill McCubbin is a conversation architect with market2world communications inc., Ottawa, Canada's tech PR and product marketing agency.)

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