Access to investment capital is crucial to business and economic development anywhere – but it is especially important in rural areas. However, research initiatives completed by the BC Rural Centre,[1] BC Economic Development Association (BCEDA), BC Community Impact Investment Coalition and Rural Development Institute (RDI) have noted that it is often difficult to access business financing – and specifically patient equity investment financing – in rural communities. Access to financing was the leading barrier to business expansion identified by business owners’ surveys conducted by the Columbia Basin Rural Development Institute.[2]


For the past two decades, rates of business creation and expansion have been much slower in many rural regions of Canada and BC. Indeed, many rural communities in BC have lost a significant number of small businesses. To make matters worse, it is projected that over half of current rural business owners would like to retire in the next five years but anticipate some difficulty in selling their business.

For more than twenty years, the Province of BC has supported a very successful venture capital program to help stimulate the development of emerging industries in BC. While very successful, the vast majority of funds raised through this program are invested in Eligible Business Corporations (EBC) which are businesses in high growth sectors, usually clustered in urban areas as depicted in the adjacent graphic.

While businesses are facing difficulties in accessing capital and the self-employment growth rate is declining, BC residents are investing huge amounts of money into RRSPs – most of which is invested outside of the province. In 2013 alone, BC residents contributed over $4.7 billion to their Registered Retirement Savings Plans. Rural residents in BC invested over $1.2 Billion into their RRSPs in 2013. If only 5% of this was redirected into community investment vehicles this would be over $235 million province-wide and over $60 million rurally per year to help improve business growth rates.

Successful Models for Raising Investment Capital in Rural Communities

Recognizing this need, BC Rural Centre and the Community Impact Investment Coalition has completed extensive research to identify best practices in raising rural investment capital. There are several successful models to redirect local investment capital into local economies in Canada, which are:

  • Nova Scotia’s Community Economic Development Investment Funds (CEDIF)[3]: the longest community investment program and portfolios operating since the 1990’s, incentivized by government policies and tax credits.  To date more than 74 companies have been created through the CEDIF process and more than $96 million has been invested by Nova Scotians[4]. Both Prince Edward Island’s Community Economic Development Business Tax Credit program[5] and New Brunswick’s Small Business Investor Tax Credit program[6] followed suit of the CEDIF model; and
  • Alberta’s Unleashing Local Capital[7] initiative and British Columbia’s Community Impact Investment sector[8]: which have been using the community owned co-operative model as an effective local investment tool. This model is growing quickly in British Columbia with the release of a new Community Investment Co-op Start-up and Operations Guide, but the model is still limited by an outdated BC Securities regulation that was introduced in 2001.

Experience in these models have demonstrated that given the opportunity, provincial residents and organizations are more than willing to invest some of their portfolios in their communities and local businesses, which keeps wealth recirculating in the provincial economies.

A CEDIF-type program in BC would mirror the current Venture Capital Program, complete with tax credits, however it would incentivize private investment into new eligible financing sectors such as: affordable housing, small business development, renewable energy, local food systems, social enterprises, and transportation and transit. These funds would be controlled by a local group of officers and directors, who may be chosen by the founders of each CEDIF or by the CEDIF’s investors at an annual general meeting.

Existing BC Government initiatives for Rural BC

The Chamber acknowledges that the BC government has taken steps in the past to strengthen rural economies in British Columbia as evidenced by the previous Rural Advisory Council (RAC), the suspended Rural Dividend Program, BC’s recent forestry industry support, and the previous Rural Economic Development Strategy. The RAC’s terms of reference goes as far as to state that government seeks advise on avenues to support greater rural access to capital.

The Chamber Recommends

That the Provincial Government create a Community Economic and Development Investment Fund (CEDIF) type program for British Columbia, which would enable individuals and corporations within B.C. communities to pool their capital together and invest in local entities that can repay the financing.