Business Development Bank boosts funds available to defence-sector entrepreneurs

The BDC Business Development Bank of Canada logo is seen in Burlington, Ont. THE CANADIAN PRESS/Sean Vokey

The Business Development Bank of Canada is increasing the funds available to entrepreneurs looking to take advantage of an anticipated boom in defence spending.

Late last year, the federal Crown corporation announced up to $4 billion in financing, investment and advisory opportunities to small- and medium-sized businesses working in defence and national security.

BDC says uptake for its defence platform has been strong, with $91.7 million in financing already provided to 16 businesses.

So the funds available are being pumped up to $6 billion.

BDC chief executive Isabelle Hudon said in a recent interview that the agency has historically taken a “shy position” toward defence. Up until a few months ago, it only had about $400 million worth of exposure to the sector, she said.

“We decided that we would go bold and we would embrace this challenge and we would meet the moment.”

She said BDC has been working hard to build credibility with those in an industry with which the agency has had little involvement until recently.

“This time around, we hear you. But are you serious? And are you into this for the mid and long term?” Hudon said, describing what she’s heard from prospective defence clients who often have to wait years before they win contracts and turn profits.

The businesses it has partnered with in the sector touch on cybersecurity, munitions and technologies with both military and civilian uses.

“We’ve opted to have a very inclusive and generous definition of defence,” Hudon said.

So far, investments through the defence platform include participation in a pre-seed round for Irreversible, a Quebec-based semiconductor startup developing artificial intelligence chips. BDC also co-led a $6.2-million seed round for Ontario-based Canada Rocket Company, which builds rockets that send satellites into orbit.

Hudon, a former Canadian ambassador to France, will be representing Canada in negotiations to set up an international Defence, Security and Resilience Bank, which is meant to reduce borrowing costs for military spending by pooling credit strength. Canada’s Big Six banks have thrown their support behind the idea.

The work to set up the bank comes as NATO countries, including Canada, have pledged to spend five per cent of their national GDP on defence.

Hudon said negotiations should begin later this month and it’s not clear yet which countries will join.

A headquarters has also not yet been chosen, but several Canadian cities have thrown their hats in the ring.

“We’ll do everything possible to rally all countries around the fact that Canada would be the perfect host country,” Hudon said.

Last month, Prime Minister Mark Carney announced Canada’s first defence industrial strategy. The $6.6-billion plan aims to help scale up small- and medium-sized businesses to create anchor firms on which the military can rely.

Right now, Canada’s defence manufacturing sector is made up of some 600 firms that employ around 81,000 workers.

The strategy vows to increase Canadian firms’ share of federal defence contracts to 70 per cent, boost Canada’s defence exports by 50 per cent and add 125,000 jobs to the sector over the next decade.

This report by The Canadian Press was first published March 12, 2026.

Lauren Krugel, The Canadian Press