Small and medium-sized businesses warn of ‘entrepreneurial drought’ crisis, lobby feds for a reduction in small business tax rate
Advocacy on economic issues dominated federal lobbying in the first half of 2026, with representatives of Canada’s small- and medium-sized business sector warning of an unprecedented “entrepreneurial drought” that could add up to big trouble for larger businesses if action isn’t taken.
“There are more businesses closing their doors than opening their doors, and that almost never happens for such a lengthy period as we're in today. We feel like we're in an unprecedented zone … where there is significant bleeding from the small business community across Canada,” said Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB). “Having one quarter of net business loss isn't alarming. That does happen from time to time. But we have had, I think, six quarters now with the odd break in between where there are more businesses closing than opening.”
Between January and June, the CFIB filed 48 communication reports for federal advocacy activity related to economic development, of which 14 occurred in June. The organization’s primary focus has been to share “shocking results” with Ottawa about a sustained decline in entrepreneurial activity across Canada where more businesses are closing than opening, according to Kelly.
On its website, the CFIB is referring to the trend as an "entrepreneurial drought," with data showing that the period between January and March 2025 (the most recent quarter where data is available for both business entries and exits) marked a fifth straight quarter of negative net business creation.
Likewise, the first six months of 2026 has been “troubling,” said Kelly, who attributed the trend to factors including a “hangover” from the business closures that occurred during the COVID-19 pandemic, Canada’s strained trade relationship with the United States, and rising energy costs as a result of the war between the U.S., Israel and Iran and its regional allies.
In 2024, around 98 per cent of domestic businesses were small companies, employing around 11 million Canadians, according to the Canadian Chamber of Commerce.
A threat to smaller businesses also has important economic implications in the long run if too many of those businesses close before they have a chance to grow into larger businesses, according to Kelly.
To help reverse the trend, the CFIB is pushing Ottawa for measures including a reduction in the small business tax rate, from nine per cent to six per cent
The small business tax rate hasn’t changed since 2019, compared to provincial rates which have been cut to an average of 1.6 per cent, according to the CFIB.
“The message that many entrepreneurs feel [is] Canada is a less welcoming country towards risk-taking and entrepreneurship, and that's the message that we're trying to get [the government] to change. We think the biggest light switch that Ottawa can turn on is a substantive reduction in the small business corporate tax rate,” said Kelly.
In June, the CFIB’s economic development-related communication reports included contact with Minister of Women and Gender Equality Rechie Valdez (Mississauga-Streetsville, Ont.), who is also secretary of state for small business and tourism, on June 1; and with Minister of Jobs and Families Patty Hajdu (Thunder Bay-Superior North, Ont.) on June 17.
The organization also communicated with MPs including on June 16, with Liberal MP Pauline Rochefort, parliamentary secretary to the secretary of state for rural development, and Liberal MP Maggie Chi (Don Valley North, Ont.), parliamentary secretary to the minister of health; and on June 1, with Conservative MP Philip Lawrence (Northumberland-Clarke, Ont.), his party’s international development critic, and with Conservative MP Brad Vis (Mission-Matsqui-Abbotsford, B.C.), his party’s small business critic.
The CFIB is represented on the registry in-house by Kelly.
To help Canada’s entrepreneurs, Valdez announced $173.7-million over five years to continue the Women Entrepreneurship Strategy (WES) on June 22. The WES is a more than $7-billion federal initiative aimed at increasing women-owned businesses' access to financing, talent, networks, and expertise.
Economic development took the lead in federal lobbying between January and June, with that subject listed in more than 9,300 communication reports. The volume of reports related to the economy far exceeded the 3,168 communication reports listing that subject in the first six months of 2025. The heightened discussions about economic development in the first half of this year was consistent with an overall trend of increased lobbying activity across the board compared to the same time period in 2025.
The Canola Council of Canada (CCC) contributed 74 communication reports to the federal lobbyists’ registry for activity between January and June. The council’s focus in June lobbying revolved around international trade and domestic biofuels policy, according to Troy Sherman, the CCC’s senior director of government and industry relations.
In January, Prime Minister Mark Carney (Nepean, Onta.) and Chinese President Xi Jinping reached a preliminary agreement-in-principle in Beijing to lower tariffs on Canadian canola seed to about 15 per cent and lift punitive duties on canola meal, peas, lobsters, and crabs starting March 1, 2026, until at least the end of the year.
Part of the CCC’s advocacy in the first half of the year has been about highlighting the importance of the Chinese market for Canada’s canola and canola products, and to express the desire that relief measures on canola meal extend beyond the end of 2026, according to Sherman.
“The agreement-in-principle … provided a level of certainty, at least for this calendar year, on a couple of canola products, including canola meal, and so we've been back in the market, meeting their demands in China for high-quality products like canola seed and canola meal, which is used largely in feed rations for aquaculture and dairy,” said Sherman. “Stressing the importance of the U.S. and China as top markets for Canadian canola and making sure that we continue to have access to those markets are absolutely top of mind.”
In regard to the U.S., Canada’s largest canola market valued at about $5.7-billion in 2025, Sherman said canola products are currently exempt from U.S. tariffs, including 10-per-cent tariffs on Canadian goods imposed by the U.S. on July 24 under Section 301 of the Trade Act of 1974.
“The demand for clean canola as a feedstock into the U.S. biofuels market is extremely strong, and so we're seeing significant volumes of canola oil destined for the U.S. as they ramp up biofuel production to meet those obligations,” said Sherman. “In terms of where the industry is at, we've gotten some clarity on a few fronts and there's still more work to do, including the future of [the Canada-United States-Mexico Agreement].”
The CCC is also advocating that Ottawa support the domestic biofuels industry. On June 26, Energy Minister Tim Hodgson (Markham—Thornhill, Ont.), along with his provincial and territorial counterparts, discussed working toward meeting 60 per cent of domestic demand for biofuels through Canadian production by 2030.
The CCC is represented on the registry by Chris Davison, the organization’s president and CEO.
The Canadian Renewable Energy Association (CanREA) filed 26 communication reports between January and June listing economic development as a subject for discussion.
In May and June, a major focus of CanREA’s advocacy was on Canada’s national electricity strategy, which was released on May 14. The strategy includes a plan to double the capacity of Canada’s electric grid by 2050, with a goal of delivering up to $15-billion in energy savings with lower total energy costs for seven in 10 Canadian households, according to a press release from the Prime Minister’s Office.
CanREA complimented the electricity strategy in May, saying in a press release that through the strategy, the federal government recognizes “the critical role of wind energy, solar energy, and energy storage in Canada’s future”
“We've also been talking about the need for transmission. Not surprisingly, if you want to double the electricity grid and electrify Canada's economy … you kind of need transmission. It'd be like saying, ‘Yep, we're going to do all this. Everyone gets a car in their driveway, but we're not going to build any more roads,’” said Fernando Melo, senior director of public affairs and federal policy for CanREA, in an interview with The Hill Times. “We're trying to make sure that there's a clear understanding that there needs to be federal funding for this, either through investment tax credits or other means, but it is something we really know that needs to be done.”
Expanding Canada’s clean electricity grid will require “stable and supportive policy frameworks,” as well as investment certainty and “efficient regulatory processes across jurisdictions” so as to attract the necessary long-term capital, according to CanREA.
Leading up to the announcement of the national electricity strategy, CanREA’s advocacy included communication with Minister of Internal Trade and Minister responsible for Canada-U.S. Trade Dominic LeBlanc (Beauséjour, N.B.) on April 2.
CanREA is represented on the registry in-house by Vittoria Bellissimo, its president and CEO, as well as by consultants Roberto Chávez and Teodora Durca of Sussex Strategy.
The Hill Times
Top Subject Matter in Federal Lobbying between January and June 2026
| Subject matter | 26-Jan | 26-Feb | 26-Mar | 26-Apr | 26-May | 26-Jun | Total |
| Economic Development | 878 | 1,663 | 1,697 | 1,886 | 1,773 | 1,496 | 9,393 |
| Industry | 644 | 1,257 | 1,310 | 1,356 | 1,457 | 1,188 | 7,212 |
| Environment | 594 | 1,225 | 1,114 | 1,256 | 1,037 | 986 | 6,212 |
| Taxation and Finance | 449 | 1,029 | 1,038 | 1,148 | 1,095 | 952 | 5,711 |
| International Trade | 556 | 1,081 | 993 | 1,065 | 962 | 929 | 5,586 |
| Budget | 428 | 979 | 904 | 1,023 | 1,032 | 856 | 5,222 |
| Infrastructure | 515 | 928 | 882 | 1,043 | 985 | 816 | 5,169 |
| Science and Technology | 430 | 838 | 910 | 923 | 1,006 | 693 | 4,800 |
| Energy | 435 | 846 | 890 | 922 | 698 | 727 | 4,518 |
| Employment and Training | 291 | 722 | 726 | 827 | 822 | 656 | 4,044 |
The above table shows the subject matter that was listed most frequently in communication reports for federal lobbying between January and June 2026. Information courtesy of the federal lobbyists’ registry.
Economic Development Lobbying in June 2026
| Organization | Communication reports | |
| Sacred Waters Development | 29 | |
| Canadian Agri-food Automation and Intelligence Network | 19 | |
| Vale Canada Limited | 19 | |
| Armateurs du Saint-Laurent | 18 | |
| Canola Council of Canada | 16 | |
| CSL Group Inc. | 15 | |
| Canadian Federation of Independent Business | 14 | |
| Canadian Renewable Energy Association | 14 | |
| Motion Picture Association - Canada | 14 | |
| Nordex Energy Canada ULC | 14 | |
| SkyCan Systems | 14 | |
| Telesat Corporation | 14 | |
| Transformer Lab | 14 |
The above table shows the organizations that filed the most communication reports in June listing economic development as a subject matter for discussion. Based on a search of the federal lobbyists’ registry on Aug. 6.
The Hill Times