Ottawa’s $4-billion program to help small businesses upgrade their digital technology is off to a slow start.
The Canada Digital Adoption Program (CDAP) has spent just $131-million on grants and loans in its first year, about 3 per cent of its budget, with some entrepreneurs and business groups saying it is complicated and poorly promoted.
The federal government unveiled the program last year as a major new investment in small businesses, just as pandemic aid was winding down.
CDAP has a suite of components, including $2,400 microgrants for website creation, $15,000 grants to fund business planning and loans of as much as $100,000 for technology upgrades such as cybersecurity software. It also offers $7,300 wage subsidies to hire students.
But data provided by the government show the program is running far below its targets.
As of March 31, just 7,600 businesses had received microgrants, less than a 10th of the way to the four-year goal of 90,000. About 3,300 businesses (of a target of 70,000) had participated in the stream to hire a consultant to write a digital plan, with a total of $47.6-million in those grants given out so far.
Of the businesses that went through the plan-writing stage, 1,170 received interest-free loans to execute their plans, with a loan approval rate of 82 per cent. A total of $65.5-million in loans has been authorized by Business Development Bank of Canada – about 4 per cent of the $2.6-billion the government has budgeted for the loans over four years.
The office of Small Business Minister Mary Ng declined to comment.
Despite the low uptake, entrepreneurs who spoke to The Globe and Mail about receiving the microgrant said it was helpful.
Janice Nowochin, a co-owner of BWorthy Bra Boutique in Slave Lake, Alta., said navigating the application form was difficult because she’s not technologically savvy. She received a $2,400 micro-grant and hired a local women-owned marketing firm to upgrade her business’s website and improve its search-engine optimization.
Ms. Nowochin said she is reaching more customers and is recommending the program to everyone she knows. “We’ve had customers come in already and say, ‘I saw this on the website and I’m interested in it. Where is it?’”
Corey Stanton, the owner of Maplescapes Farm near Kingston, also received a $2,400 microgrant, which he put toward marketing products such as fertilized hatching eggs. He said they can be a niche market but feels he’s now a step above other backyard breeders with his new digital presence and e-mail marketing campaigns.
“I don’t know if the eggs look prettier so people are, like, ‘Oh, I want to buy eggs from this farm,’” Mr. Stanton said. “But I’m 50 orders behind on eggs. And last year this time I was not 50 orders behind.”
But business groups say CDAP could be promoted better and that some entrepreneurs have been put off by the confusing structure of the program.
Aaron Binder, the director of the Better Way Alliance, says the government should be more aggressive in getting the word out. “Out of the dozens (probably hundreds) of business owners I’ve told about CDAP, two knew about it before I mentioned it to them,” he said in an e-mail.
Dan Kelly, the president of the Canadian Federation of Independent Business, said entrepreneurs are busy, so a program like this needs to be “dead easy” to find and use.
Regarding the $15,000 grants for hiring an independent contractor to write a business plan, the concern is that it has created a feeding frenzy among tech consultants, whom the program calls “digital advisers.” Some consultants are now teaching other consultants – for a fee, of course – how to find and coach business owners to apply for the grants.
Mr. Kelly said his group was “getting lots of calls from business owners who are asking about the legitimacy of a community of consultants that is cold-calling small-business owners desperate for money.”
Jim Hinton, an intellectual property lawyer at Own Innovation, said it would have been better if the $47.6-million spent on digital planning had gone to business owners, not their consultants. “Someone is laughing all the way to the bank on this one,” he said.
David Nagy, the founder of Ecommerce Canada and one of the first consultants to sign up with the government program, said his team spends four to six weeks with an entrepreneur developing a strategic plan as much as 60 pages long with supporting documents. “If you do it right, this is the greatest program ever” for business owners, he said.
However, he is not sure that all the 650 registered digital advisers put as much work into their plans. He said some pitch themselves to businesses as gatekeepers of the large interest-free loans, which they are not. He suggested the government audit the strategic plans to make sure they are worth the $15,000.
Businesses say the program has worked well when they had a non-profit to guide them.
Leslie Butt, the owner of Threads Up, a liquidation store in Conception Bay South, N.L., said she formed a close connection with her adviser at the Canadian Council for Aboriginal Business (CCAB), who, like her, was Indigenous and a single parent.
“It was actually nice to connect with somebody who understood the intergenerational trauma and the commonalities of Indigenous individuals,” she said. “With my adviser, we cut the formality really quick.”
The CCAB also convinced Ottawa to lower one barrier: When the program was launched last March, it was restricted to business owners with at least one employee.
“CCAB knew from our knowledge of the Indigenous economy that this was going to be a barrier for Indigenous businesses to participate in the program,” Ashley Williams of CCAB said in an e-mail.
The council petitioned Ottawa, and by the fall the government had rolled back that requirement – first for Indigenous businesses, then for everyone.
The other major goal of CDAP is to increase youth employment. The government wants 28,000 young people hired over four years through two streams. According to federal data, 1,150 (of 11,200 expected for one stream) have been hired for support roles at business groups such as the Ontario Chamber of Commerce. It’s not clear if any of the 16,800 student placements in the other stream have been filled, though the government said 800 businesses have expressed interest and 170 have posted job openings through the program.
Emily Madden, the senior director of non-profit Magnet, which is co-ordinating the student placements, said some students have been hired but would not provide a number. She attributed low numbers to the length of time it takes a small business to go through the steps required to hire a student through the program.