Senate committee says Canada's small-business funding gap is a delivery problem, not a shortage of capital

A Senate banking committee has concluded that Canada does not have a shortage of capital. Its problem is getting that capital to companies that need it to grow, and the committee has put forward a set of recommendations ahead of Thursday's federal budget.

The clearest evidence the committee points to is the shrinking of the TSX Venture Exchange, the main route for emerging companies to raise early public money before graduating to the Toronto Stock Exchange. The exchange had 2,329 operating companies in 2002 and 1,362 in 2025. Graduations to the TSX fell from 72 in 2007 to 11 last year, and IPOs and capital pool company listings fell from 230 in 2007 to 11 last year. About half of the dealers represented by one industry group stay out of junior markets altogether, citing regulatory burden and cost.

The committee's proposals would give investors in junior-market companies tax treatment comparable to investing in Canadian-controlled private corporations, let investors defer capital gains on SME shares when the money is reinvested in other Canadian SMEs, and extend flow-through shares beyond the resource sector. It also proposes that Ottawa name a minister responsible for SMEs and convene a standing roundtable on public market competitiveness. The committee's report was the product of a year-long study that heard from more than 35 witnesses.

The committee notes that many of the levers over capital markets sit with the provinces and their regulators, and calls for co-ordination and harmonization, rules proportionate to company size and stage, and a fresh look at know-your-product rules. The Ontario Securities Commission head told the committee that Canada has a junior market ecosystem that does not exist in meaningful form in the United States.

The Finance Minister, François-Philippe Champagne, is due to table Budget 2026 on Thursday.