Canadian Banks Struggle to Finance Defence Companies Amid Regulatory Concerns
Canada's banks are facing challenges in financing defence companies due to concerns over risk and regulatory compliance. The government has earmarked $84 billion for defence spending over five years, but lenders require that defence companies have secured procurement contracts before lending.
Dominique Babin, a lawyer advising defence companies on how to appeal to banks, said that lenders need to see that companies have secured contracts before they are willing to lend. 'They need to get the contracts before they get financing,' he said.
The government has been investing in initiatives to attract funding to the sector, including providing additional funding to Business Development Bank of Canada (BDC) for loans, venture capital, and advice to smaller companies. BDC's CEO, Isabelle Hudon, said that banks are looking at different roadblocks and wondering how to lift them.
The defence industrial strategy aims to more than triple Canadian defence-industry revenue, boost exports, and create jobs. The government has also provided additional funding to BDC for loans, venture capital, and advice to smaller companies aiming to contribute to defence.