{"id":74761,"date":"2026-06-18T08:00:13","date_gmt":"2026-06-18T08:00:13","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/06\/18\/bdc-report-identifies-biggest-barriers-for-smes-trying-to-enter-defence-space\/"},"modified":"2026-06-18T08:00:13","modified_gmt":"2026-06-18T08:00:13","slug":"bdc-report-identifies-biggest-barriers-for-smes-trying-to-enter-defence-space","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/06\/18\/bdc-report-identifies-biggest-barriers-for-smes-trying-to-enter-defence-space\/","title":{"rendered":"BDC report identifies biggest barriers for SMEs trying to enter defence space"},"content":{"rendered":"<p> \n<br \/><iframe loading=\"lazy\" title=\"Why Canada best home for global defence bank\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/t7ZfgvmV7ac?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p> Canada needs to overcome a \u201cthree-speed\u201d growth divide among small- and medium-size enterprises (SMEs) as it ramps up spending to build its defence industrial base, according to a new study. <\/p>\n<p> A report released Thursday by the Business Development Bank of Canada (BDC) and The Icebreaker, an SME defence innovation network, said there is a \u201crare window of opportunity\u201d for Canadian companies in the defence ecosystem but their growth is uneven due to the sector\u2019s high barriers to entry and complex requirements. <\/p>\n<p> BDC surveyed 642 business owners and decision makers who are active in the defence sector. Their companies were categorized into three groups: defence-heavy and actively growing; defence-light and expanding cautiously; and in \u201cexploration mode\u201d and interested in joining the sector. <\/p>\n<p> SMEs are the \u201cbackbone\u201d of Canada\u2019s defence industry, said Peter Dawe, BDC\u2019s vice-president, defence strategy and a retired major-general in the Canadian Armed Forces. According to BDC data, SMEs make up 92 per cent of businesses in the sector and account for 40 per cent of employment. <\/p>\n<p> But companies looking to enter the defence space face the steepest barriers compared to more established ones, the report said. <\/p>\n<p> \u201cIf you\u2019re new to the defence business, it can appear pretty daunting,\u201d Dawe said. \u201cIt\u2019s hard to decipher. And the hurdles to gain access seem pretty significant.\u201d <\/p>\n<p> The report said each of the three groups face different challenges depending on their level of involvement in the defence sector, including long sales cycles, maintaining sufficient cash flow and difficulty hiring or retaining skilled workers. <\/p>\n<p> But firms already active in the space do share a commonality: 29 per cent of defence-light and 28 per cent of defence-heavy firms said meeting \u201cdefence-specific requirements\u201d is limiting their growth over the next 12 months. <\/p>\n<p> \u201cThere are specific certifications that need to be met, like cyber, for example,\u201d Dawe said. \u201cSecondly, as warfare and military-related technologies continue to evolve, we\u2019re seeing a greater requirement for security classification s to be able to operate in this space, and that too tends to be difficult to secure.\u201d <\/p>\n<p> With a high bar for entry into the defence space, Dawe says BDC plays an important advisory role to SMEs in \u201cdemystifying\u201d the procurement process. <\/p>\n<p> \u201cHaving a better understanding of what those requirements are and proactivity by SMEs is especially important because you don\u2019t want that to be the constraint,\u201d Dawe said. <\/p>\n<p> Accessing capital is also a challenge, as \u201cfinancial institutions remaining cautious about the risk profile, limited customer base and unstable cash flows of the sector,\u201d the report said. BDC\u2019s survey found that half of defence SMEs looking for financing over the next 12 months think it will be difficult. <\/p>\n<p> \u201cThe challenge in many cases is that (the companies) don\u2019t necessarily have a contract in hand , but they see the demand coming, and in order for them to be able to meet that demand and participate in supply chains, they need to be able to scale,\u201d said Dawe. <\/p>\n<ul class=\"related_links\">\n<li>Strengthening Canada&#8217;s defence sector is a &#8216;once-in-a-generation opportunity&#8217; to invest, CIBC head says<\/li>\n<li>Canada&#8217;s $150-billion challenge: How to build a homegrown defence sector and fast<\/li>\n<\/ul>\n<p> Seventy-six per cent of businesses surveyed by BDC are involved in international trade, a necessity given Canada\u2019s relatively small defence market. For companies to \u201cthrive and survive\u201d in the long term, Dawe said they need access to other countries. <\/p>\n<p> \u201cHistorically, that\u2019s primarily been south of the border, which will continue to be a very important market to us,\u201d he said. \u201cBut as we\u2019ve seen recently, it\u2019s important to have a variety of opportunities. It\u2019s clear that our government is leaning towards a closer relationship with Europe.\u201d <\/p>\n<p> Dawe said BDC is pursuing a \u201cmatchmaker initiative\u201d to help source SMEs and connect them with government defence projects . He said opportunities could include a mix of traditional domains like land, air and sea, and emerging ones such as cyber and space. <\/p>\n<p> \u201cWe have the relationships with the (primary contractors). We have the relationships across government,\u201d he said. \u201cWe have a pretty clear line of sight in terms of what the broader governmental aspirations are looking like.\u201d <\/p>\n<p> <em>\u2022 Email: jswitzer@postmedia.com<\/em> <\/p>\n<p><iframe loading=\"lazy\" title=\"Labour crunch looms for Canada\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/qe6vySdmW_Y?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><br \/>\n<br \/>\n<br \/>BDC report identifies biggest barriers for SMEs trying to enter defence space<\/a><br \/>\n<br \/>2026-06-18 08:00:13<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canada needs to overcome a \u201cthree-speed\u201d growth divide among small- and medium-size enterprises (SMEs) as it ramps up spending to build its defence industrial base, according to a new study&#8230;.<\/p>\n","protected":false},"author":2,"featured_media":74762,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-74761","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/74761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=74761"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/74761\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/74762"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=74761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=74761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=74761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}