Starting a Small Business in Canada
When starting a small business in Canada, most entrepreneurs start off one of two ways.
With existing money, capital, or funding, or little to no money which leads into the need to get small business grants or funding.
Some would say, “how can you start a small business and have no money to start off with?”, and they aren’t wrong. However as Canadians, our government has helped so many small business owners across the country do exactly that. How? With government funding and small business grants and loans.
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So, Are You Eligible for Small Business Grants?
There are many misconceptions around government grants, loans, and government funding in general.
Some people think that they are automatically eligible and “deserve” government funding simply for being Canadian. However, because funding is offered by different levels of government and not just the Canadian federal government, those agencies responsible for dispersing the funding to help small business owners grow need to ensure that only those who can actually help the economy get the funding.
Funding offered by these levels of the Canadian government are not scams. They in fact exist. However, it’s the same groups of individuals who apply (but don’t meet the criteria) that cause the misconceptions and promote them.
Government funding and small business grants are not any different than bank loans. When you walk into a bank, are you given a loan right away? Or do you, like every other person, have to meet some requirements before you can obtain funding?
Small business grants are the exact same. In order to be eligible and successfully apply, you must meet certain conditions. To actually obtain small business grants, many factors are considered.
Factors Considered for Small Business Grants in Canada
To be eligible and apply for small business grants in Canada, the factors that are considered include:
- Your location
- Your industry
- Your funding needs
- Your credit history
- The program or agency you apply to
- The time of the year (deadlines)
- Your business plan
Depending on the funding agency or program, different factors and different criteria are looked at in order to be considered a successful candidate and obtain a small business grant or a loan.
Why “My Location”?
The location of your business has a big impact on your chances of obtaining government grants, loans, and funding for your small business. Because government funding doesn’t just come from the federal government, but from multiple sources (local, provincial, and federal), your location is considered to see who can provide you the funding.
Think of it like this: if you live and operate your business in Ontario, would you apply to a funding program that only offers funding for residents of Alberta? Probably not. This is why your location is an important factor in determining which small business grants and loans are available, and if there actually are any.
Why “My Industry”?
Similar to the reason why your location is an important factor, your business industry has a big impact as well. There are funding programs and government funding agencies that fund specific industries. There are agencies that focus strictly on technology, others on manufacturing, others on agriculture, and so on. It’s important to look at funding options for your small business within your industry. Keep in mind that your business may fit into multiple industries as well.
Why “My Funding Needs”?
Knowing what you need funding for, and how much funding you need, will help you determine what type of small business grants and loans may be available. Similar to your industry and your location, your funding needs and the amount of funding required have an impact and are important factors.
There may be programs in your city, for your industry, and for your type of business, but if you are in need of funding of $100,000 and the only available program has a maximum of $10,000, you are out of luck.
Funding programs are sometimes divided into many different funding needs. There could be funding to help you start your small business, conduct research and development, pay for employees, hire and train staff, pay for advertising, purchase tools and equipment, complete land and property renovations, or improve cash flow.
It’s often good advice to break up your funding needs into smaller chunks and cover all aspects of what you need now and what you may need later, versus looking at a big lump sum in small business grants.
Why “My Credit Score”?
Just as when you go to the bank and apply for a credit card, line of credit, or a mortgage, your credit score is looked at. It’s not any different when applying for small business grants from the government.
Your credit score tells potential investors what you as an individual or as a business are like in terms of making payments. It’s a way to judge the risk of lending you money.
You may have an excellent idea and a great business plan, but if your credit is very poor and it’s clear that you have bad judgement when it comes to handling money, it may impact your odds of getting funded.
Why the Program or Agency I Apply To?
Different funding programs and funding agencies have different criteria to consider before they can award a grant or loan to a small business. At times, each funding program may have a different list of factors in addition to those mentioned above.
To ensure your highest chances of obtaining funding, it’s recommended to understand the agency and the funding program and to follow the rules and criteria they set out.
Why the Time of the Year?
Deadlines are important to government funding agencies. These deadlines are set because the specific agency or program has to meet certain requirements on the back end, which may not be important to individuals but are economically important.
It can happen that you meet all of the requirements and all of the factors mentioned above, but apply too early, too late, or past the deadline and have your application rejected.
When you figure out which funding program to apply to, it’s recommended to give yourself enough time to prepare everything you need and ensure you meet the deadlines.
Why My Business Plan?
Your business plan is one of the most important factors to consider when applying for a small business grant or a loan. Because your business plan is the key piece of information government agencies use to decide whether to provide funding, it has to be solid.
No business has been funded and succeeded without having a proper business plan.
Are You Eligible for a Small Business Grant?
The short answer is yes, if you meet the criteria mentioned above, you are definitely on your way. However, keep in mind that each funding program has a different set of criteria to meet.