If you are starting or growing a business in Prince Edward Island, you may already know that there is an extensive range of programs, loans, grants, and tax rebates available to businesses. These are provided by the Department of Economic Growth and Culture, and primarily delivered through Innovation PEI and Finance PEI.
Innovation PEI has a mandate to focus on accelerating economic development in PEI by investing in people, innovation, and infrastructure. A recent and long overdue strategic review of the Innovation PEI business support programs will bring a welcome update and simplification to better meet the needs of small and medium businesses on the Island. But we also know that COVID has had a devastating impact on small businesses, and PEI is no exception. We don’t just need to review what we have, we must be bold with new approaches to invest in what is frequently called the engine of our economy – small businesses.
Small businesses create job opportunities and growth – that’s why governments at all levels should prioritize entrepreneurship in the recovery from COVID. This means rethinking how we support new businesses to start and grow, and how we can help existing small businesses make it through the pandemic. Support doesn’t just look like funding, but a community-wide effort to help small businesses survive and thrive.
Invest in financial innovation
One of the challenges for government investment in business is managing the risk. Taxpayers expect government to be good fiscal stewards and that is challenging when dealing with the risks involved in starting and growing a business. One of the ways to reduce that risk is for government to provide seed funds for other investment models that are based in the community they serve, including:
- Exploring funds that use innovative investment models such as revenue-based investing or profit-sharing;
- Supporting nonprofit evergreen funding models that invest in new enterprises and recycle funds continuously, working with existing community partners and banks;
- Creating Entrepreneurial Catalyst Grants to invest in starting and restarting businesses underserved by the current system with targeted programs for underrepresented groups, including women, BIPOC community, and newcomers.
Expand local support ecosystems
Traditional economic development incentives don’t always lead to sustainable small business jobs and growth. They are often focused on attracting larger companies with programs like labour or tax rebates, rather than growing new businesses. Strong examples of support programs for entrepreneurs (through mentoring, networking, training, educating, incubating, and investing) include Startup Zone and the Startup Canada network, as well as CBDC sites in rural PEI. In expanding supports, it is critical to consider:
- Micro-businesses (that employ only one to three individuals) are a huge part of our economy, but are often ignored or underserved in business support program delivery;
- Rural entrepreneurial economies need locally provided resources and programs that are geared to the unique needs and opportunities of the area;
- A business has economic value even if it is not creating an exportable product or service. We must reconcile our ‘support local / buy local’ messaging with how we support local small businesses;
- Starting a business needs skills that can be provided via workforce training for entrepreneurs, without the limitations of EI eligibility.
Provide access to contracts
Government spends millions of dollars on goods and services. A government contract is not only revenue for a business, but it is validation of their product for other potential purchasers and, of course, keeps that money in the local economy. Government could take immediate and impactful action by:
- Dedicating a pilot percentage of 10% of government procurement dollars to Island-owned businesses under 5 years old;
- Creating a program for new startups to build products and services that government needs but does not have the internal capacity to develop.
Helping small businesses in PEI start and grow leads to more jobs, greater productivity, wealthier communities, and inclusive prosperity. I call on this government to make the investment in programs and services, community partnerships and creative solutions that the backbone of our economy – small business – really needs.
Hannah Bell is the MLA for Charlottetown-Belvedere and the Official Opposition Critic for Economic Development