Small Business BC (SBBC) Bankruptcy: Causes, Impact, and What’s Next!

Benjamin Isaacie

Author

Benjamin Isaacie is an experienced technology professional, and the CEO and Founder of Persisca Technologies.

Shirin Niasti

Editor

Shirin Niasti is a Product Owner and Website Developer at Persisca Technologies, specializing in digital solutions.

Why Did SBBC Collapse?

SBBC’s financial challenges were caused by a combination of internal and external factors:

1. Rapidly Rising Operating Costs
   Between 2019 and 2023, SBBC’s operating budget more than doubled from $3.34 million to $7 million. This sharp increase, driven by expanded programs and services, strained resources beyond sustainable levels. Despite receiving increased funding, its expenses consistently outpaced its revenue.
2. Ineffective Oversight
   SBBC relied heavily on federal and provincial funding. While it had government representatives on its board, oversight mechanisms failed to detect and address the underlying financial mismanagement. The organization reported a deficit of $37,608 in its final fiscal year despite increased income.
3. Economic Pressures
   Rising inflation, higher labor costs, and shifting business dynamics further squeezed SBBC’s operations. The economic fallout of COVID-19 left many small businesses unable to afford SBBC’s paid services, reducing its self-generated revenue streams.
4. Overreliance on Public Funds
   Federal and provincial contributions formed the backbone of SBBC’s budget. In the absence of a diversified funding model, the organization was unable to weather external shocks.

What Happens Next? What happens to us?

SBBC’s closure has left a significant gap in entrepreneurial support across British Columbia. However, its role is too crucial to remain unfilled. Here’s what might come next:

Unpaid Grants (such as the $2,400 under CDAP)

• Unresolved Grants: Businesses that have been approved for grants but have not yet received the funding may face significant delays. The bankruptcy trustee will likely need to address these pending payments, but there is no guarantee that all recipients will be paid. In some cases, these funds may be forfeited as part of the bankruptcy proceedings.
• Government Involvement: The government (federal or provincial) might intervene and either redistribute the funds through another channel or ensure that the payments are honored through another body if the program is deemed essential.

Approved Vendor Payments

• Vendor Payments: Businesses that were approved to pay vendors using SBBC’s grants may still be able to make those payments, but again, this depends on whether the funds have been disbursed or are still pending. If the funds were not distributed before the bankruptcy, it’s possible these vendors will not receive payment unless the bankruptcy trustee or government steps in to settle outstanding obligations.

Lawsuits and Violations

• Ongoing Lawsuits: Any ongoing lawsuits or legal actions SBBC was involved in could be complicated by the bankruptcy. The bankruptcy trustee will assume control over these matters, and the pursuit of any claims against violators will depend on the financial resources available after addressing the organization’s debt.
• Violated Agreements: If SBBC was pursuing violators of its funding program terms (e.g., fraud or misuse of grants), these actions might be paused, or legal recourse might shift to other entities (like provincial or federal regulators) to take up enforcement.

What Happens Next?

Ultimately, how each of these situations is handled depends on the details of the bankruptcy proceedings, the trustee’s actions, and whether government agencies step in to fill the gaps left by SBBC’s closure.

SBBC Program Funding Over Time (2016–2023)

This chart visualizes the funding allocations across key programs by Small Business BC (SBBC) from 2016 to 2023. It shows the financial support provided to small businesses through initiatives such as the Canada Digital Adoption Program (CDAP), Export Navigator, Boost Your Business Technology, and other key services. The chart highlights the growth in funding, especially after 2020, as SBBC adapted to the needs of entrepreneurs and responded to the challenges of the pandemic.

Has This Happened Before?

Yes, SBBC’s collapse is not unprecedented. Similar organizations have faced financial challenges and closures:

• WE Charity (Canada): Collapsed in 2020 due to mismanagement and over-reliance on government contracts.
• California Small Business Development Centers: Some centers folded post-pandemic due to funding issues despite critical roles in business recovery.
• Community Development Corporations (US): Many shut down after failing to adjust to economic shifts, highlighting the vulnerabilities of public-private initiatives.

These cases demonstrate that organizations serving public interests must balance financial sustainability with their social missions.

SBBC Programs and Grants Since 2016

SBBC operated numerous grant programs and services designed to support small businesses in British Columbia. Here’s a breakdown:

1. Canada Digital Adoption Program (CDAP)

• Grow Your Business Online: Micro-grants of $2,400 for e-commerce solutions.
• Boost Your Business Technology: Grants of up to $15,000 for digital adoption plans.
• Years Active: 2022–2023.

2. Export Navigator

• Focused on helping businesses expand into international markets.
• Funding: Started at $607,800 in 2016, reaching $1,987,635 by 2023.

3. BC Employer Training Grant

• Covered up to $10,000 per participant for workforce development.
• Years Active: 2016–2023.

4. COVID-19 Recovery Grants

• Provided emergency relief during the pandemic, totaling over $5 million between 2020 and 2021.

5. Small Business Workshops and Seminars

• Aimed at improving entrepreneurial skills with webinars and in-person training.
• Funding: Difficult to isolate but consistently offered.

6. Innovator Skills Initiative

• Grants of up to $10,000 to encourage diverse hiring in the tech sector.
• Years Active: 2020–2023.

7. Workplace Accessibility Grant

• Funding for improving accessibility in workplaces.
• 2022–2023: $430,000.

SBBC Programs and Funding Allocations (2016–2023)

Here’s a complete table for SBBC’s funding data, with placeholders or notes where specific data verification is pending. Each year and program is detailed to provide a comprehensive overview:

Key Takeaways

SBBC’s collapse was not the result of a single issue but a combination of economic, managerial, and systemic factors. While the organization’s demise leaves a void, it also offers lessons about the need for diversified funding, effective oversight, and proactive risk management.

As for the future, SBBC’s programs are too valuable to disappear entirely. With the right reforms and collaborative efforts, its core mission of empowering small businesses can continue through a new entity or expanded roles for existing organizations.

What remains clear is this: British Columbia’s small business ecosystem relies on robust support networks. Their survival—and success—depends on learning from SBBC’s story.