Are you a Canadian looking to grow your business? Here’s everything you need to know about small business grants in Canada and what you need to qualify.
Starting a new business is exciting. However, the major challenge small businesses face is the lack of finances to fund their operations. You need money to carry out various activities and scale your business to the next level.
Small business grants can come in handy. In Canada, you may realize it’s challenging to find a grant. Although there are grants available, most of them are for specific groups of people participating in some things and certain places. Government grants round up in some industries like biotechnology, agribusiness, environmental technology and more.
Types of Grants in Canada
Canada has different kinds of grants available. Some common types include:
Government grants are specific as they target some industries and places. For example, you may qualify for a government grant if you want to create a biotech hub. You need to be in a specific industry to be eligible for a government grant.
Grants for Particular People and Places
You can access grants to small business program northwest territories. These grants are ideal for small businesses, sole proprietorships, partnerships, and cooperatives that have less than $500,000 in gross sales.
All Northwest businesses qualify for up to $15,000 a year under the SEED entrepreneur support program. The money can assist with the cost of startup, operational support, product promotion, market development, and capital assistance.
Aspiring farmers in Quebec are eligible for startup grant of up to $25000. The only catch is that they need to be between the ages of 18 and 40, and the projects need to steer sustainable development.
Grantsn for Specific Industries
Some industries are at an advantage when accessing business grants. Small enterprises that deal with agri-food or seafood sector qualify for up to $250,000 in funding. These businesses need to come up with new export markets or get into existing export markets.
However, for you to be eligible, your company needs to have annual sales of $50 million. Also, your business needs to contribute a percentage of the project costs and have a ready export market after conducting market research.
The Center of Excellence in Next Generation Networks offer financial support for businesses. Nonetheless, your business needs to be dealing with security, Software Defined Network, Internet of Things, Cloud, or Network Transport to qualify for this grant.
Partial Small Business Grant Programs
The Toronto Region Sustainability Program helps to cut down the number of toxic releases and gases in the environment. With this program, you can get a fifty percent cost-share funding incentive for up to $5,000.
Also, the program offers one-stop pollution prevention for small and medium enterprises in the Toronto area.
If you run a business that deals with environmental, agriculture, or sustainable tech, you can access up to $30,000 in funding. What’s more, you get mentorship and coaching sessions. The only catch is that you need to match their grant with your financial contribution.
Other Small Business Grants
Although small business grants are few, there are other programs to explore. However, these programs need to see your level of commitment, and you need to make the necessary contributions in the form of sweat equity.
These programs provide mentorship and training, apart from business funding. The self-employment program is one avenue to explore. The program helps participants create a business plan and get an income for up to a year. All you need to qualify is the employment insurance.
The Summer Company provides Ontario students with awards that act like business grants. They receive $3,000 and training as part of the package. Nevertheless, you must not be eligible for other programs like the self-employment program.
The New Brunswick Growth Program offers fund for businesses dealing with expansions. New businesses qualify for up to $100,000 non-repayable contributions. Established enterprises can get up to $60,000 for diversification, expansion, and improvement in their competitiveness. Nonetheless, your company needs to be In New Brunswick to be eligible. Also, you need to be in exports/imports, tourism, information technology, or manufacturing and processing to qualify for the growth program.
Essential Tips for Finding Small Business Grants
Fortunately, there are still ways to find business grants in Canada. Here are some tips to help you get started.
Understand the Words and Phrases Used
You’ll rarely find the term small business grants on Canadian sites; this is because these types of grants are few. Use other phrases like small business financing, subsidies, contributions, non-repayable loans, and awards when looking for funding.
Determine the Category your Business is under
In Canada, your business can be in a grant-rich industry or an industry not funded by grants. You’ll realize some industries blend well with Government objectives and may be eligible for funding.
Retail business grants are rare. However, you can find programs that support small businesses in North or Southern Ontario.
If you’re aren’t sure where your business fits, you can visit the Government of Canada website under the find your industry sector. Understanding the industry your business is under, and its NAICS code can make your grants search easier. Do not forget to check out grants Canada to find out if your business qualifies.
Take Advantage of Available Opportunities
Taking part in the SR&ED Tax credit program gives you access to tax credits, which is a form of free money that can fund your business. The best part about this program is that you don’t have to prepare a proposal and wait for approval to be a part of the project.
You can start the project and make your tax claim. However, most businesses do not know if this kind of program exists.
Have a Solid Business Plan
Everyone who would consider giving you a business grant needs to see a comprehensive business plan. Your business plan needs to outline financial details like cash flow projections, a balance sheet, and an income statement.
If you don’t have any knowledge on creating a business plan, no need to worry, you can get help from government-supported organizations and Canadian Business Centers; Business plan software is beneficial. You can also go online and; learn how to research and write each part of the business plan.
Understand that You May Need to Contribute Financially
You may find it daunting to get a small business grant in Canada as there is no free money readily available. Most small business loans require you to contribute a certain percentage of the funding you need. For example, the self-employment program requires you to make your contribution to start a business though they provide training and mentorship.
Determine what’s in it for Your Lenders
If you need to get a small business loan, you need to determine what your lenders get in return for their contribution. Some investors may need to have a say in how your business turns, while others will require an ownership percentage.
For example, an angel investor may need to have an active role in how your company is managed. This kind of investors needs higher returns than what they would get in ordinary investments.
When looking for funding, sit down and figure out what type of lender works for your business. Customize your business plan to meet the lender’s need and to answer any questions that may come up while pitching your business.
Realize that the Age and Size of Your Business Matter
Small businesses have a tough time finding funding than established enterprises. Also, the size of your business plays a role in the amount of funding you qualify for. You’re likely to pay a higher interest rate if your sales are less than $500, 000. Research also shows that you may pay a higher interest rate if you have less than ten years of experience in the business.
Always provide accurate and complete information when applying for a grant. Providing false information like misquoting sales figures may disqualify you. Also, incomplete applications show that you’re not serious and this may delay the review and approval process.
What Are Other Financing Options Available?
Looking for a grant can be tedious and time-consuming. Sometimes your business may not qualify for the available subsidies. Nonetheless, you can explore other business financing options.
For example, you can access different kinds of onventional financing like IPOs, venture capital, or angel investors. Furthermore, you can search for funding in crowdfunding and peer-to-peer lending sites.
Other traditional debt financing options include:
- Business loans
- Credit cards
- Commercial mortgage
We hope that this advice helps you secure some funding for your business. While small business grants are rare in Canada, you can still access available few. Start your search for business grants in the catalog of federal domestic assistance site.
The catalog lists thousands of grants from government agencies. If your search doesn’t yield anything, don’t be afraid to think of other financing options like family and friends, personal financing, contests, and home equity line of credit.