Most people are surprised to learn that Canada gives out more funding than most other countries by way of businesses grants.
Most grant programs are generic, which means a funding program can be applied to by many businesses from a whole range of industries. Apart from specialized “green” incentives, the grants fall into three buckets:
-R&D, innovation or product development
-Hiring and training
-Export or access foreign markets
Before you apply for government grants, there are a few things you should be aware of. They include the following:
- Virtually, all grants have a capped budget and the funding body that administers the fund always receives more applications than it has funding for. When a business knows when funding is available for a grant, it can adjust its projects accordingly to increase its chances of receiving the grant. Therefore, applying for grants should be an ongoing and planned process. This can be handled most effectively by a professional firm with expertise in government business funding.
- All government grants must be applied to well in advance of a project’s start date so that applicants have sufficiently planned their projects and met the most eligibility criteria. It is important to note that funding will not be permitted for work already completed, or for expenses already paid.
- Many grant programs favour small- to medium-sized businesses (SMEs) with under 500 employees. Moreover, some programs target specific industries or geographical areas. It may be difficult to find out about grant program rules and deadlines, so businesses need to have a professional source (a provider) to stay abreast of developments in funding that pertain to their business sector.
Here is a run-down of some the more prominent grants;
R&D, Innovation, and Product Development
SR&ED tax credits
The most significant funding for R&D is the Scientific Research and Experimental Development (SR&ED) tax credit program. It is a very popular program because it has no budget and is delivered through the corporate tax system. It is the largest program of its kind for the past 10 years, which has ranged annually from $2.5B to $4B. Over these years, on an annual basis, approximately 20,000 to 30,000 businesses have made SR&ED claims.
Canadian-controlled private companies that meet certain financial criteria can earn a refundable tax credit equal to 35% of eligible SR&ED costs. In addition, most Canadian provinces have their own R&D tax credits. All other companies earn a non-refundable 15% tax credit. Some provinces provide additional R&D tax credits to these companies.
Industrial Research Assistance Program (IRAP) has been around for decades. Essentially, it funds R&D projects with criteria similar to those of SR&ED. The program generally funds 50% of the costs covering salaries, contract fees, some materials and a factor for overhead.
Each year, IRAP has a budget in excess of $200 million. It is usually better to apply to this program at the beginning of fiscal year, April 1. Funds are usually committed quickly, leaving a much smaller amount after six months.
Strategic Innovation Fund (SIF)
Offered in four key streams, SIF started accepting applications in July 2017. The government has committed $1.2 billion over 5 years to this program. While initial indications were that the fund would only be aerospace and automotive, the scope of its mandate was expanded to all companies, irrespective of size and industry.
To our knowledge, as of the date of this blog’s publication, no applications have been processed due to their large volume, and the approval wait time is uncertain at this point.
Hiring and Training
Canada-Ontario Job Grant (COJG) is focused on training, whereby a third party provides training to your staff. Qualified training includes sales, technical, administration, leadership or any training that increases employees’ ability to further their career and earn a higher pay grade. It covers up to two-thirds of total training costs provided by the third party, with a cap of $10,000 per participant.
NSERC Experience Award (for hiring)
Natural Sciences and Engineering Research Council (NSERC) provides $4500 towards any new Co-Op students. They must be enrolled in a technology or science field in a Canadian post-secondary institution. The student must be a Canadian citizen or have a permanent visa.
IRAP YEP (for hiring)
IRAP for Youth Employment Program (YEP) covers 50% of salaries up to $15,000 for hiring any new recent graduate under the age of 30. The position must be R&D-based, or environmentally impactful. The position must last for a minimum of three months and a maximum of six months.
Export or Access Foreign Markets
EMA (attending foreign trade shows)
Export Market Access (EMA) covers 50% or up to $30,000 to cover the cost of attending a trade show outside of Canada. You can apply for up to 3 tradeshows per application, for a total 6 trade shows per year. To qualify for this grant, you must exhibit or have a booth.
CanExport (access new foreign markets)
This program covers 50% of market costs capped at $100,000 to enter a new market outside of Canada. Eligible costs include travel, market research, tradeshow, consulting and legal costs. A new market is defined as a country in which you have had no previous sales in the past 24 months.
Special industry incentives
There are competitions, bid opportunities, and small grants that appear from time to time within the industry. It is hard to keep track of all of them unless you follow a source that aggregates them in one single location. One such great resource that offers access to this information is Azimuth Health.
Brian Cookson is President and Managing Director at RDP Associates, a Toronto-based company focused on government funding and R&D Tax Credits.