August 4, 2026 | NCFA Insight | SME Finance And Business Banking, Capital Markets And Market Infrastructure, Public Sector Policy And Industrial Strategy

Small Business Finance As A Connected Market

On July 30, 2026, the U.S. Securities and Exchange Commission announced that its Small Business Capital Formation Advisory Committee would reconvene on August 6, 2026. The committee will continue work on public market access and capital formation for smaller companies.

On July 27, 2026, the SEC delivered its 2026 Small Business Forum report to Congress. The annual Forum brings founders, investors, intermediaries and policymakers together to develop and prioritize recommendations. The standing committee continues the work between forums and advises the SEC on rules affecting private companies and smaller public issuers.

The process isn't a fast track to reform. Some recommendations become rules, some need Congress and others return for years without a final answer. But what's really valuable is the public record. A market problem gets an owner, a recommendation, a response and a history that can be checked later.

The combined U.S. record contains 426 recommendations from the Forum between 2012 and 2026 and the committee between 2019 and 2026. That total includes repeated calls for the same reform. Finders and limited capital introduction, for example, appeared 29 times. A proposed federal framework arrived in 2020, but no final order was identified by August 3, 2026. By contrast, a 2019 committee recommendation to raise the Regulation Crowdfunding limit was reflected in the 2020 Regulation Crowdfunding reforms that increased the ceiling to US$5 million and removed investment limits for accredited investors.

Canada's financing files are moving too. The federal government is committing C$1 billion to the Growth VCCI program, while Ontario develops professionally managed funds that could give retail investors access to private assets. Both initiatives can widen the market. Neither creates a standing way to identify the gaps between a financeable company and the investors prepared to back it.

The U.S. hasn't solved small business finance. It has kept company access, investor access and market rules in the same public conversation. Canada has consultations and capable institutions, but no single process currently connects those questions and tracks the response from one review to the next.

Company Access And Investor Access Belong In One System

Financing policy usually arrives in separate files. One initiative supports venture funds. Another considers retail access to private assets. Regulators review an exemption while economic development agencies provide loans, grants or commercialization support. Companies experience those programs as one market when they have to move from one source of capital to another.

The U.S. Forum keeps more of that system in view. Its 2025 Small Business Forum report connected early capital, accredited investor access, Regulation Crowdfunding, smaller funds, retail access to private markets, secondary trading and the cost of becoming public. Not every proposal deserves approval. Keeping them together shows how one decision affects the rest of the market.

A capable business may begin with customer revenue or a grant, add community or angel capital and later reach strategic, institutional or public investors. NCFA's analysis of who gets access to capital shows why that path is uneven. Geography, networks and investor relationships can determine which businesses get seen before investment merit is even tested.

Managed funds and direct investing serve different markets. Ontario's Long Term Asset Fund Project could give households professionally managed exposure to a diversified portfolio of private assets. Investors still choose the manager rather than the companies. Fees reduce returns, private assets can be hard to value and redemption windows can limit access to cash. The fund may also invest outside Canada or buy existing interests, so retail access doesn't guarantee new financing for Canadian businesses.

Direct equity crowdfunding lets people choose a business and can turn customers or local supporters into investors. The tradeoff is concentrated company risk, less information than a public company provides, possible dilution and little chance to sell for years. Platforms also need enough credible issuers and active investors to cover compliance and operating costs. Canada needs both routes because they serve different investors and finance different companies.

Regulatory Constraints Leave Canada Behind International Peers

Canada's estimated equity crowdfunding market (NI 45-110) equals only C$5.15 million in 2025. Comparable markets generate between six and thirteen times more funding relative to their business base.

• Canada. Approximately C$5.15 million, or C$3.76 per employer business. The estimate uses FrontFundr's reported 2025 investment activity and 93% market share because Canada doesn't publish an official national total.
• United States. Approximately C$289.1 million in 2025 Regulation Crowdfunding proceeds, or C$48.99 per employer business. The SEC figures put the U.S. rate at thirteen times Canada's.
• Australia. Approximately C$29.8 million across 63 successful offers in its 2025 financial year, or C$29.99 per employing business. Australia's market rate is eight times Canada's.
• European Union. Approximately C$804.9 million in equity crowdfunding during 2024, or C$24.10 per active enterprise. ESMA's figures put the EU rate at 6.4 times Canada's. The EU uses an earlier reporting year and counts active enterprises rather than employer businesses, so the comparison is directional.

Why? Canada's lower issuer ceiling, tighter retail investor limits and divided portal and dealer model don't explain the entire gap. They do restrict how much a company can raise, how much ordinary investors can contribute and whether smaller offerings are economical for intermediaries to support.

Canada would need roughly C$41 million to C$45 million more of annual activity to match Australia after adjusting for the number of people or employer businesses in each country. That is about eight to nine times Canada's estimated 2025 market.

The United Kingdom provides a useful scale check, but not a perfect annual match. Its broader equity crowdfunding market raised £324 million across 297 rounds in 2024, or about C$567 million at the Bank of Canada's 2024 average exchange rate. The year and reporting method differ from the Canadian, U.S. and Australian figures, so the UK number is directional. It still shows how small Canada's investment crowdfunding retail market remains.

The jobs record is less complete. Crowdfund Capital Advisors estimates that U.S. Regulation Crowdfunding has financed more than 8,100 companies since 2016 and created or supported over 430,000 direct and indirect jobs. It also estimates more than US$27.1 billion in economic activity. Those are industry estimates, not official SEC statistics.

An earlier British Business Bank study of successful UK raises found that 39% of companies hired an average of 2.2 employees after raising equity or debt crowdfunding. Another 48% intended to hire. Within three months, 28% had completed angel or venture financing and 43% were in discussions with institutional investors. The study is from 2015 and combines equity and debt models, so it describes company results rather than a current national total.

Australia's 2025 report says 25% of successful offers came from companies returning for another raise, but it does not provide a national jobs figure. Canada doesn't publish an equivalent job or later financing series either. The missing comparison is part of the problem, not a reason to invent one.

Growth VCCI Cannot Reach Every Financeable Company

Growth VCCI is a serious capital supply intervention. Budget 2025 committed C$1 billion beginning in 2026 to 2027. The current design allocates C$700 million to funds of funds, C$200 million to life sciences investment and C$100 million to emerging managers. Ottawa expects the funds of funds stream to attract three private dollars for each public dollar.

See: What BrewDog's Sale Could Mean For Retail Investors

That can strengthen professional fund management and support high growth companies that match a fund's strategy. However, Growth VCCI does not invest directly in companies. Fund managers will still choose businesses that fit their ownership targets, time horizons and return requirements.

Some financeable companies will not fit a VC model. The examples below aren't failed venture deals. They are different financing jobs.

• A regional manufacturer may need C$3 million for equipment
• A profitable consumer brand may want expansion capital without giving a fund a large ownership position
• A rural business may be important to its local economy while offering steady rather than venture scale growth.

Recent Canadian offerings show what direct investing can deliver and where the current regulatory design constrains it. Leading investment crowdfunding platform FrontFundr reported that:

Edison Motors raised C$1.49 million from 961 investors under NI 45-110, reaching 99% of Canada's C$1.5 million annual issuer ceiling.

Blossom came nearly as close, raising C$1.45 million from 951 investors through the exemption and another C$482,619 from accredited investors.

Gander raised C$1.15 million under NI 45-110 and combined it with other investment to reach just over C$2 million.

These companies attracted hundreds of investors, but the exemption limited how much they could raise through that channel. Companies seeking more capital had to add accredited investors or use another financing route. FrontFundr's 2025 investment crowdfunding activity places these offerings within the wider Canadian market.

See: What Ten Years Of U.S. Investment Crowdfunding Shows

Edison also shows that progression can work. After reaching the startup crowdfunding ceiling, the company continued with accredited investors and an offering memorandum. It reported approximately C$14 million raised by May 2026. The next question is how often other companies make that transition, what it costs and where they stall. Canada doesn't publish enough company funding lifecycle data to answer it.

Four Recommendations

The most transferable U.S. lesson is the public chain from market problem to government response. In 2024, the SEC advisory committee recommended raising the Regulation Crowdfunding threshold that triggers reviewed financial statements from US$124,000 to US$350,000. The proposal hasn't become a final rule, but the recommendation, rationale and response remain visible.

Canada could build the same discipline around four connected reforms.

1. Make smaller offerings commercially workable. Review the C$1.5 million issuer ceiling, investor limits, disclosure thresholds and intermediary permissions together. Published platform pricing can reach roughly 7% to 8% plus fixed fees. Raising the cap alone won't solve weak distribution if a portal or dealer still can't serve the offering profitably (read: dealer/funding portal economics).
2. Measure the route to the next financing. Track how often companies move from NI 45-110 into an offering memorandum, accredited investor capital, strategic investment or public markets. Publish the time, cost, abandoned raises and investor liquidity outcomes. Edison shows that progression can happen, but one company can't establish the national pattern.
3. Make national distribution work in practice. NI 45-110 is harmonized, yet adjacent exemptions, filing systems and dealer reach still create provincial friction. Canada should identify the remaining duplication and let compatible offerings reach investors nationally without repeating the same work province by province.
4. Publish national market data and track longer term results. An annual report should show offerings launched, completed, withdrawn or closed below target, along with capital sought and raised, issuer characteristics, intermediaries, investor participation and repeat raises. A separate study every two or three years should track company survival, later financing, employment, revenue growth and investor results. The first report would show how the market operates. The second would show whether it produces sustainable value.

An annual Small Business Capital Formation Forum could set the priorities. A standing committee could continue the work between forums. Founders, angels, retail investors, venture managers, exempt market dealers, platforms, Indigenous and community finance leaders, regulators and economic development bodies should all have seats. No single group sees the full market.

See: How UK Private Markets Are Adding Investor Liquidity

The output should stay short. Publish each recommendation, the problem it addresses, the body responsible for responding, its current status and the next review date. Keep the archive public. An unresolved proposal shouldn't disappear into a consultation file and return five years later as if the problem were new.

Talking Point

The U.S. lesson is the discipline of keeping unresolved capital problems visible until someone responds. Canada already has venture programs, managed private market proposals, exemptions, portals and dealers. A national forum would bring those routes into one public review and show which companies each one serves, where financing stops and who is responsible for addressing the gap.

Growth VCCI can strengthen institutional venture capital. Managed funds can widen retail access to private markets. Direct investing can reach companies outside fund mandates and let Canadians choose which businesses they back. Canada should evaluate these routes as one capital market and judge them by a practical result: whether more financeable businesses can reach investors on workable terms.

If Canada can publish a billion dollar plan for venture capital, should it also publish the financing barriers founders and investors want fixed, who owns each response and what changed?

This article is provided for informational purposes and does not constitute investment, financial or legal advice. Programme designs, securities rules and market data may change. Readers should confirm current requirements with the responsible regulator or programme administrator.

The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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