Canadian Government Funding for Small Businesses
The Canadian government has some amazing government funding programs that small business owners and startups can apply for.
This year, one of the best years to seek government funding is full of options for pre-revenue start-ups, existing business owners bouncing back in this economy, as well as those looking to further advance and grow their businesses.
With the economy being in shambles, interest rates are high via banks, making it extremely difficult and expensive to borrow money; hiring is getting costly with such high unemployment rates (more so people not wanting to work); it’s all a mess. This means that everyone needs that extra cash to make it through.
GROW YOUR BUSINESS WITH GRANTS & LOANS
Learn about the funding available for your small business. It just takes a second!
The good thing is that the Canadian government has multiple program types to help get business owners on track and funded.
Government Funding Programs
Before we get into the various government funding program types, it is a good idea to first understand that government funding comes from multiple levels of the Canadian government.
Local Government Funding
Initially, it is always best to look locally for funding. This means your own city or town, or your own suburb, as these programs are often much easier to obtain funding acceptance from. Especially if the business you have is run, operates, and targets customers in your own city. Every city is looking to give back to boost the local economy. This money is considered local government funding.
Local government funding often has the fewest funding options, but they are much easier to obtain when available.
Provincial Government Funding
From there, to expand your search and reach wider, consider provincial government funding options, or inter-provincial options. This means that your province is trying to boost entrepreneurship and grow the provincial-level economy, so they give the money to deserving businesses.
Provincial government funding is more available as a business owner in one city may benefit from various other locations and governments within the same province. In other words, the provincial government has more money to dedicate toward entrepreneurship than your local government.
Federal Government Funding
Lastly, looking far and wide for government funding options, you want to consider the federal government of Canada, as it covers all cities and all provinces and often has the most options for small business owners.
Federal government funding options are often able to cover the majority of businesses, as they have the most money and are more likely to be available for many more funding needs, industries, and locations across Canada.
The recommended step to consider when seeking government funding for your business is to utilize all three levels of government to maximize your potential.
To see all available government funding options across Canada, use the Funding Database.
3 Government Funding Program Types
To get into some more specifics regarding government funding program types, here are the three top funding option types to consider:
- Government Grants
- Government Loans
- Tax Breaks or Tax Credits
Each of these three government funding types can be further broken down into more specific options, each with its own advantages and disadvantages, but definitely amazing options to get your business funding via the Canadian government.
Government Grants
A government grant is often one of the more favorable funding types offered by the various local, provincial, and federal government agencies. In most cases, a government grant is often considered free money, due to the fact that it does not need to be repaid.
It is important to note that there are different government grants, including:
- Non-repayable government grants
- One-time and renewable grants
- Partial contributions
The non-repayable government grants are exactly as they sound: money that is provided to you as a business owner to cover various expenses you may have, with no need to pay the funds back.
The one-time and renewable grants are grant options that are provided to business owners seeking funding to cover a one-time purchase, such as paying for renovations or improving equipment, while renewable grants are options that fund ongoing expenses such as employee hiring, wages, or training costs.
The partial contributions are much like non-repayable grants; however, they often require an initial deposit or funding by the business owner as well. The partial contribution can mean any percentage based on what the grant agency agrees to. For example, if you are applying for $50,000, the approved partial contribution may be provided assuming you are also putting $50,000 of your own money in.
The partial aspect is helpful if you already have money to put toward your business. If not, it is probably a good idea to stay away.
It is important to keep in mind that while government grants are preferred, they are also very competitive and often not available for all types of funding expenses.
Government Loans
Government loans, much like a traditional bank loan, are money you borrow from government agencies, or loans that are backed by the government, to give your business a boost with the money you need to cover expenses.
The various loan types available include:
- No-interest and low-interest loans
- Conditionally repayable loans
- Government guaranteed loans
The no-interest or low-interest loans are much like traditional bank loans. You borrow the money from a specific government funding agency and use it for your business. The loan amount, interest, and repayment terms are often negotiated to benefit your business.
Unlike a bank loan that only wants your interest money, a government loan is designed to help you succeed.
The conditionally repayable loans are similar, but conditions are placed and often negotiated to help you as the business owner get the most out of the borrowed money. Often, a condition may be in place to not have to pay the loan back until you reach profitability, or to delay payments for the first year. This gives you the most opportunity to succeed.
With government guaranteed loans, the government is your co-signer on the loan application. This means they are taking on a percentage of the risk with you, and if things do not go as planned, you are not responsible for the entire amount borrowed.
A government loan is a great way to fund your business quickly, with higher approval rates compared to government grants.
Tax Breaks and Tax Credits
In addition to government grants and government loans, tax breaks and tax credits are often free money as well. However, these types of government programs are often considered last, as you must first spend the money in order to claim the credit or tax break.
Most business owners need the funds now, whereas tax credits often come around tax time as a refund. While this is just as valuable as a grant, many business owners shy away from them, but they are something you should definitely not miss, as they provide amazing opportunities to benefit.
To see all government options, including grants, government loans, and tax breaks, visit the Funding Database and benefit from expert help and guidance.