TORONTO—The federal government and Canada’s big banks have announced a fund worth up to $1 billion over 10 years intended to help small- and medium-sized businesses access capital so they can expand operations.
The government and the banks say the pool of money would initially set aside more than $500 million for the first year, with the possibility of that doubling over the next nine years, depending on demand for investment and the fund’s performance.
The announcement follows a recommendation issued last month by a federal panel advising Finance Minister Bill Morneau on economic growth.
The need to help small- and medium-sized enterprises secure money to grow has become a growing topic of conversation in financial and political circles lately.
During a speech to the Canadian Club of Toronto last month, CIBC CEO Victor Dodig spoke of how such a fund would invigorate the economy.
He said CIBC has been in talks with the federal government and other financial institutions about creating a “sizeable” Canadian business growth fund, financed by the private sector, for small- and medium-sized enterprises.
“What’s interesting about the business growth fund in Canada is that it’s a private sector initiative,” Dodig said.
“It’s financial institutions coming together to help the small- and medium-sized business sector and generate a return for our shareholders, and the government has simply come together to convene us to say, ‘We think this is a good idea, we think you should go do this.”’