National Infrastructure Projects: What’s at Stake for Small Business

For Canada’s small businesses, the biggest risk right now isn’t competition—it’s an economy that is standing still. Growth has ground to a halt, with the economy contracting slightly in the second quarter of 2025 and some forecasts suggesting another possible decline in the third, leaving entrepreneurs to face an economy offering no momentum and no clear path forward. Amid global uncertainty and domestic headwinds,  Canada's path forward lies in investing in its own future through infrastructure development and policies that incentivize private sector growth. 

Without this, persistent slack in the economy and weak productivity will continue to hold back growth, discouraging private investment and weighing on small business confidence. The tariffs situation with Canada’s largest trading partner, the United States, is discouraging cross-border business and delaying investments decisions. For small firms that rely on integrated North American supply chains, the lack of clarity and constantly changing trade rules adds another layer of risk to an already fragile economy.

Small firms, the backbone of the Canadian economy, are feeling the pinch. Small business confidence remained fragile in July 2025, with CFIB’s July Business Barometer® long-term index registering 50.9—far below the 65–70 range typically associated with the economy operating at its potential. Nearly six in ten small businesses identified insufficient demand as their top constraint, reflecting weak market conditions. This subdued confidence is translating into reduced capital activity: CFIB’s Main Street Quarterly finds that private investment contracted by 3.1% in the first quarter of 2025, with further projected declines of 13.0% and 6.9% in the second and third quarter respectively.

Without improved productivity and renewed investment, Canada’s economy will continue to stagnate. Against this backdrop, infrastructure investment policies emerge as strategic levers to bolster the economy, boost regional connectivity, and strengthen internal trade flows. The question is whether governments can deliver approvals quickly enough, and with small businesses in mind.

Faster Approvals Could Unlock Growth—If Promises Match Reality

To respond to Canada’s current challenges, the federal government introduced the One Canadian Economy Act in June 2025. Better known as Bill C-5, it merges two major legislative components: the Free Trade and Labour Mobility in Canada Act and the Building Canada Act. The latter aims to accelerate approvals by creating a new fast-track for projects deemed to be of “national interest.” Its intent is clear: shorten timelines and streamline reviews.

Still, many remain cautious. Some stakeholders question whether the framework will truly cut delays or simply shift them to earlier stages, while others worry that added complexity could deter investment.

For small businesses, the promise of faster approvals is appealing, but whether that promise translates into real improvements on the ground remains to be seen.

CFIB’s July 2025 omnibus survey of more than 1,900 business owners shows just how much is riding on faster approvals: nine in 10 business owners believe faster approvals  of major infrastructure projects would help grow the economy. An equally large share (90%) agree that quicker, clearer processes would give them the certainty to plan for future opportunities.

Reducing Internal Trade Barriers: Building a Single Economy

Beyond faster approvals, small businesses also see value in breaking down internal trade barriers through stronger infrastructure.  Three-quarters of small businesses say accelerating infrastructure projects would improve transportation and supply chain access—addressing what many view as one of the most persistent barriers to internal trade.

Figure 1: Most small businesses say streamlining infrastructure projects would improve logistics

Accelerating infrastructure projects will improve transportation and supply chain access for our business (%)

Source: CFIB, Your Voice – July 2025, July 10-24, 2025, final results, n = 1,920.

Question: To what extent do you agree or disagree with the following statements? (Select one for each line)

This builds on earlier findings. In CFIB’s April 2025 ^[2] omnibus survey, transportation and logistics challenges ranked as the second-largest obstacle to buying or selling goods and services across provincial or territorial borders. Almost two thirds (65%) ^[2] of small and medium-sized enterprises (SMEs) said that improved or expanded infrastructure—roads, bridges, railways, and ports—would be a practical and effective way to reduce internal trade freight and transportation barriers.

When paired with regulatory reforms and the recent progress to remove internal trade barriers to improve the flow of goods, services, and labour, infrastructure policy becomes a tool for building a unified Canadian economy. Strategic investments in infrastructure could lower freight costs, shorten delivery times, and open new domestic markets.

“If all levels of government want to revisit national infrastructure projects, they should be pursuing high speed rail for commercial and regular transport [… ] We are a small company in BC and alone, we ship 200 pallets a month to Kamloops. In Italy, goods are transported with high-speed passenger cars in the front of the train. ’’

-B.C. Business

Tempered Optimism: Concerns Around Inclusion and Safeguards

Yet this optimism is tempered by concern: 89% of respondents say small business interests are often overlooked or excluded from the planning and execution of major projects. Without deliberate, early inclusion, the benefits of national infrastructure investments risk bypassing the very firms that are best positioned to contribute.

Beyond inclusion, SMES recognize that environmental safeguards are part of the trade-off:  nearly two-thirds worry that environmental considerations could receive less attention under a fast-track regime. As one Ontario professional services firm put it, the government must be “totally open with the public […] about any plans for development in regards to environmental effects of any infrastructure.”

Taken together, these findings show that while small businesses see faster approvals and stronger infrastructure as key to unlocking growth and reducing trade barriers, they remain concerned about being left out of the process and about the balance between speed and safeguards.

Why Small Businesses Care About How Projects Get Built

Procurement: Keeping the Benefits Local

Major infrastructure is more than cranes and concrete —it’s also billions of dollars in contracts for goods, services, and materials. If procurement policies do not deliberately include small firms, local businesses risk being shut out of opportunities in their own communities. CFIB has long urged governments to make Canadian procurement a priority, ensuring SMEs can compete for (and win) these contracts. In our April omnibus survey, 76% of business owners said that giving Canadian businesses priority in government procurement would help address internal trade challenges. When local businesses are considered, the economic benefits stay in the community, domestic supply chains are strengthened, and reliance on foreign suppliers is reduced.

For many small firms, procurement access is the bridge between policy change and real economic impact. Most say streamlined projects would boost their communities and improve logistics, with 87% agreeing that faster approvals would help their community grow and attract more economic activity. Done right, Bill C-5’s acceleration of national projects could translate into tangible local gains, not just in the immediate contracts awarded, but in the longer-term economic networks they help create.

Managing the Build: Construction Mitigation Matters

While new infrastructure can create long-term economic gains, the construction period can be devastating for nearby businesses—especially in retail, hospitality, and businesses located around worksites. According to a CFIB study covering the previous five years, more than 260,000 small firms have been severely affected by major construction, with disruptions lasting an average of 508 days and revenues falling 22% during that time.

Mitigation strategies, such as direct financial compensation, maintaining customer access, providing temporary tax relief, and improving project communication, should be standard practice for all governments funding or approving major projects. Without them, public support for accelerated infrastructure could erode.

The Local Permit and Licensing Approval Logjam

Governments at the federal and provincial levels have started taking real steps to cut red tape—through internal trade reforms, mutual recognition, and broader regulatory reviews. But unless municipalities modernize their permitting and licensing systems, much of that progress will fail to reach the ground. Local permitting and licensing remains one of the biggest barriers for growth, particularly for housing and mixed-use developments that support workforce availability near major projects. As one Ontario wholesaler puts it:

“We need cities and provinces to work together and reduce red tape in residential construction. There is a lot of news about major infrastructure projects but not enough talk on concrete actions taken to reduce red tape burden for residential projects. Municipalities should do more to help with densification and promote the construction of basement suites, laneway housing, micro dwellings, renovations and new construction.”

Recent data makes that urgency clearer. According to World Bank findings, Canada ranks near the bottom—64th out of 187 countries—in terms of ease of dealing with construction permits, placing it in the bottom 20 percentile globally. R-LABS, a Canadian real estate and innovation lab, further shows that delays in site plan approvals are a major factor dragging down performance. For instance, for a simple warehouse in Toronto, approval can take as long as 249 days, compared to just 41 days in Singapore and 81 days in the U.S.

Promising models exist, but aligning municipal permitting reforms with federal infrastructure acceleration would multiply economic benefits—by ensuring supportive housing, business spaces, and service infrastructure are ready when national projects come online.

The Path Forward

CFIB urges government to:

1. Consider the impacts on SMEs – ensuring that small businesses’ voices shape both project planning and internal trade rule changes.
2. Adopt construction mitigation standards – protecting local economies during the build phase.
3. Reform municipal permitting and licensing – aligning federal acceleration of projects with better local collaboration.
4. Integrate infrastructure–trade strategy – planning road, port and corridor investments to directly reduce freight and transportation barriers.

In today’s uncertain economic climate, Canada cannot afford to let critical infrastructure projects languish or internal trade reforms stall. Linking faster builds to freer trade offers a double dividend: stronger supply chains and a more unified domestic market.

Bill C-5 is a good starting point, but only if governments at all levels coordinate, protect existing businesses during construction, and ensure regulatory reforms deliver tangible benefits for SMEs. The measure of success will not be how fast projects are approved, but how well they connect Canadians and the businesses that power their communities—to each other, to markets, and to opportunity.

Endnotes:

^[1]  The Main Street Quarterly forecasts were released on July 24, 2025. 

^[2]  Source: CFIB, Your Voice – April 2025, April 10-24, 2025, final results, n = 937, margin of error of +/-3.2%, 19 times out of 20. Question: What challenges have you experienced when purchasing or selling goods/services from/to other provinces/territories? (Select as many as apply) 

^{[3] Source: CFIB, Your Voice – April 2025, April 10-24, 2025, final results, n = 2,044, margin of error of +/-2.2%, 19 times out of 20. Question: How helpful would each of the following proposed interprovincial trade solutions be for your business? (Select one for each line)}