Summary · why it matters
A new BDC study produced jointly with The Icebreaker reveals that Canada’s defence ramp-up is creating a three-speed growth opportunity for small and medium-sized enterprises, with some firms already scaling to meet demand, others advancing cautiously, and a broader pipeline still working to enter the complex market. The survey of 642 business owners identified three stages: defence-heavy SMEs operating at or near capacity with immediate demand, defence-light SMEs expanding more cautiously as they balance defence and civilian markets, and firms preparing to enter where 55% are still in exploration mode while 45% plan to enter within three years. Two-thirds of surveyed defence SMEs are active in international trade, but exports remain heavily concentrated in the United States at 63%, with Europe accounting for just 21%. Key barriers include long procurement cycles, defence-specific requirements, financing challenges for more than half of SMEs, and labour shortages, with 30% of defence-heavy SMEs reporting significant hiring difficulties. BDC has doubled its activity in the sector since launching its Defence Platform in December 2025, completing over 100 transactions to support Canadian defence and dual-use firms.