Canada Should Take a Page from Kamala Harris’s Small Business Playbook

By Daryl Ching, CFA | Managing Partner Vistance Capital Advisory Since being announced as the Democratic Nominee, Kamala Harris has made a splash and most notably, she has demonstrated a keen interest in encouraging startups and small businesses in the United States. She has set a goal of 25 million new small business applications for her first term in office. To achieve that goal, she has made a number of proposals: · Increase the tax deduction from $5,000 to $50,000 for costs of starting a small business · Develop standard deduction to help save small-business owners time when filing taxes · Reduce barriers to occupational licenses to for works in trades across state lines or for businesses to expand to other states · Initiate a small business expansion fund to enable community banks to cover interest costs when emerging enterprises are trying to expand · Harris had pledged one-third of federal contract dollars go to small businesses by expanding opportunities in rural areas and underserved communities While these are campaign promises and may not necessarily materialize, Harris is clearly an advocate of entrepreneurs and is looking to facilitate a record number of small businesses startups during her first term. Her tone clearly suggests she wants a country that strongly supports business startups. By contrast, with the exception of the Canadian Entrepreneur’s Incentive (policy which reduces the capital gains inclusion rate for an exit of up to $2MM), which really was a minor offset to an announcement to increase capital gains tax inclusion, there is no new federal policy that substantively helps small businesses thrive in Canada. In fact, the latest policies of increasing the capital gains inclusion rate and the shutting down of the CDAP (Canada Digital Adoption Program) have made things more difficult for small businesses in 2024. While the Bank of Canada has started to ease interest rates, corporate loans are still priced at over 9% interest for profitable small businesses and remain far off from pre-COVID rates. The Canadian government should consider a policy like what Harris is proposing – creating a fund for banks to provide relief on interest costs for small business loans. This would thaw the debt markets and make them more accessible to Canadian businesses. It is unsettling to see that the ease of starting a business continue to diverge between Canada and the US. It will not be a surprise to see Canadian business owners pack up and move south of the border if they haven’t already. We certainly hope our federal government will take a look at the proposals put forward by Kamala Harris and consider taking a page out of her playbook. About Daryl Ching Daryl Ching is the founder and owner of Vistance Capital Advisory, providing accounting, capital raising and fractional CFO services to SMEs. He has over 10 years of investment banking experience, starting his career at RBC Capital Markets where he structured multi-billion-dollar transactions moving to smaller investment banks where he completed smaller debt and equity transactions in various asset classes. After leaving investment banking, Daryl started to work with small businesses as a CFO preparing financial statements, strategic planning, budgeting and forecasting, and raising capital through investors and banks. Mr. Ching has been well recognized as an expert in structured finance, making numerous appearances on the Business News Network and has been quoted in major newspapers and magazines across Canada. Mr. Ching completed the Honors Economics Program at the University of Western Ontario and is a CFA Charterholder.