Canada’s Small Businesses Are Missing AI’s Biggest Productivity Gains

By Kekeletso Nkele, small.news Assistant

(small.news) — Canada’s small and medium-sized businesses could help grow the economy by 6%, roughly $150 billion, if all of them were using AI in their operations, according to a new study by the Business Development Bank of Canada, reports The Logic.

This central finding lands at a moment when governments and industry are increasingly looking to AI as the most promising lever available to address Canada’s persistently weak productivity growth.

The productivity gap between AI users and non-users is already measurable and significant. The BDC report found that businesses currently using AI generated 24% higher sales per employee on average than those that did not, after accounting for variables such as industry and location. Yet despite this advantage, only 30% of Canadian SMEs are currently using generative AI, leaving most small businesses outside the shift with clear financial consequences.

The Gap Between Leaders and the Rest Is Enormous

The BDC study goes further than AI adoption alone. It estimates that Canadian SMEs could unlock nearly $350 billion in economic growth if more firms reached the digital and AI maturity of the country’s top-performing SMEs, modeling a scenario in which 92% of SMEs reach the digital maturity of today’s leading 8%.

BDC research also shows that overall SME productivity could rise by up to 38% if businesses across the country reached a very high level of digital maturity. That finding frames AI and digital adoption as the most consequential business decision many Canadian SME owners could make in the coming years.

The challenge, the report concludes, is no longer awareness; it is execution. Moving from adoption to results is what now separates leading economies, and for Canada, accelerating digital maturity is also a question of sovereignty, tied to the ability to build domestic capability and capture value at scale.

The LIFT Program: Off the Sidelines and Into Action

In anticipation of the study’s findings, BDC launched its LIFT initiative, short for Lead with Innovation and Focus on Technology, in late April. The $500-million programme connects SMEs with consultants who assess where AI can best be integrated into their operations, then provides a loan to fund implementation, helping up to 1,000 businesses move from AI sidelines into productive use.

Borrowers pay 2.25% interest, matching the Bank of Canada’s current overnight rate, and are given up to 2 years to repay the principal under certain conditions. BDC Chief Operating Officer Véronique Dorval said the rate structure was deliberately designed to lower the psychological barrier to investment. The program includes an advisory component as well as financing because BDC recognized that money alone is not enough; businesses also need guidance on where AI will actually pay off.

Adoption Alone Is Not Enough

BDC’s Chief Information Officer Jean-Sébastien Charest was direct about the limits of simply getting businesses to try AI tools. He said that if the goal is to move the needle on the full benefits of AI, businesses need to be intentional. LIFT is designed to move companies beyond experimentation and side projects by identifying specific problems where AI can genuinely improve productivity and competitiveness.

That distinction between casual adoption and meaningful integration runs through the entire study. Many businesses that have technically “tried” AI have done so through informal experimentation rather than deliberate deployment. The productivity gains associated with serious use do not flow automatically from simply having an account on a generative AI platform.

A National Productivity Problem with a Practical Solution

The federal government has launched other lending programs to encourage AI adoption, including a $200-million Regional Artificial Intelligence Initiative and a $100-million AI Assist program to help businesses integrate AI into their operations. Even so, uptake has remained low, with about 12 percent of Canadian businesses reporting AI use in the second quarter of 2025, according to Statistics Canada, and adoption concentrated in larger firms and knowledge-intensive industries.

The BDC study and the LIFT program together represent the most substantial and evidence-based push yet to change that picture. BDC COO Dorval said the program’s goal is to help Canadian SMEs move from the sidelines of AI and invest confidently in improving their productivity. She warned that choosing not to adopt AI will threaten a business’s competitive position against other players, both domestically and globally.