Small Business BC (SBBC), a non-profit organization established to support British Columbia’s entrepreneurs, filed for bankruptcy on December 5, 2024, ceasing operations and laying off nearly 40 staff. The announcement has ignited intense scrutiny of the organization’s financial management and the provincial and federal governments’ oversight of their respective funding. The closure of SBBC, an organization funded to assist small businesses during turbulent economic times, raises questions about government accountability and the allocation of public funds.

Premier David Eby addressed the situation in a press conference earlier this week, acknowledging the government’s awareness of SBBC’s financial difficulties but stating that staff were working with the organization to address the issue prior to its decision to enter creditor protection. Eby emphasized that the government’s priority now is recovering taxpayer funds and ensuring obligations to employees are fulfilled.

A Rapidly Expanding Budget and Rising Deficits

SBBC’s financial records reveal a pattern of budgetary growth coupled with inconsistent fiscal management. The organization’s annual budget more than doubled, from $3.34 million in fiscal 2019 to $7.07 million by fiscal 2023. However, this growth did not translate into financial stability. Despite recording a surplus of nearly $500,000 in 2022, the organization reported an operational deficit of $38,000 in 2023. These figures suggest an alarming inability to maintain fiscal discipline as funding increased.

One of the most striking metrics is the rise in salaries and benefits, which grew from $1.56 million in 2019 to over $2.15 million in 2023. This 38 percent increase outpaced the organization’s overall budget growth and raises questions about whether resources were being allocated responsibly. Board expenses followed a similar trend, with expenditures in 2023 totaling $20,209, compared to just $9,843 in 2021. This escalation in administrative costs coincided with the organization’s financial unraveling.

Government Funding and Oversight

SBBC’s operations were heavily reliant on funding from the federal and provincial governments. In fiscal 2023 alone, the organization received over $4.6 million from sources such as Pacific Economic Development Canada (PacifiCan) and BC’s Ministry of Jobs, Economic Development, and Innovation. This dependency placed responsibility on government bodies to ensure the funds were used effectively – which they did not do.

Coastal Front reached out to PacifiCan and BC’s Ministry of Jobs, Economic Development, and Innovation for comment but has not received a response.

In a public statement, BC Conservative MLA Gavin Dew posed urgent questions to Premier Eby and the provincial government about SBBC’s collapse. Dew emphasized the need for accountability and transparency.

“Bankruptcy does not happen overnight,” he said. “The government had direct representation on SBBC’s board to steward its investments and provide oversight. How, then, did this situation escalate to the point of no return without intervention? If the government was aware, why did it fail to act? And if it was not aware, this raises further concerns about its ability to effectively oversee organizations it funds and influences.”

Dew’s statement outlined several key questions, including:

• When did the Ministry first become aware of SBBC’s financial troubles?

• Was the collapse due to government funding withdrawals or internal mismanagement?

• What oversight mechanisms failed to address financial difficulties earlier?

• Has a forensic audit been initiated, and will its findings be made public?

Dew, in comments to Coastal Front, reiterated his concerns about the government’s role.

“The government was not in the dark here,” he said

“They cannot possibly have been surprised. If they knew a legacy organization with a close relationship to government was about to declare bankruptcy, why didn’t they do anything about it?”

He added, “How can anyone take seriously the NDP’s newfound zeal for supporting private sector jobs when they’re asleep at the switch on something this basic?”

Federal Funding

PacifiCan’s role in funding SBBC has also come under scrutiny. In November 2024, just a month before the bankruptcy filing, PacifiCan announced $2.7 million in funding for SBBC programs, including business advisory services and mentorship initiatives. However, the federal agency stated it suspended payments after disbursing $88,000.

The Irony of a Support Organization’s Collapse

The closure of SBBC comes at a particularly challenging time for BC’s small business community, which is facing increased economic pressures, including rising bankruptcy rates and the impact of higher inflation and borrowing costs. The organization, originally established in the wake of Expo ’86 to help businesses capitalize on economic opportunities, leaves behind a legacy tarnished by its own inability to navigate financial instability.

SBBC’s website now displays only a single line announcing its bankruptcy and the appointment of MNP Ltd. as trustee, marking the conclusion of an organization heavily reliant on taxpayer funding.

Adding to the controversy, the LinkedIn profiles of senior executives reveal abrupt departures shortly before the bankruptcy filing. CEO Tom Conway and COO Josh Ludgate both left their roles within weeks of the announcement. While their departures have not been explicitly linked to the bankruptcy, their timing highlights questions about leadership during a critical period.

The collapse of SBBC is less a reflection of economic pressures and more a testament to government failures. Millions in taxpayer dollars flowed through the organization, yet both its leadership and the government failed to ensure accountability or recognize the warning signs.