The Canadian government supports entrepreneurs and small business ownership in order to boost the economy. This is done through government funding programs that provide funds to small businesses to cover various expenses a business may have.
These government funding programs often come in the form of government grants, government loans, tax breaks, and tax credits.
Government grants are often what people think of when discussing government funding, and that is what we will focus on today as we explore and explain the 3 main types of government grants available to Canadian small business owners.
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Keep in mind that while government grants are available, they are not always available for all businesses or all funding needs. It is always important to speak to a funding expert before you apply for any government grant programs.
Top 3 Government Grant Types for Small Business Owners
While government grants are often referred to simply as “grants” or “free money,” there are actually different types that you should understand. These include:
- Non-repayable government grants
- Partial contribution grants
- Conditionally repayable grants
Each type of government grant is different and comes with its own eligibility criteria and guidelines.
Non-Repayable Government Grants
Non-repayable government grants are often considered the best type of grant a business owner in Canada can receive.
As the name implies, these grants do not need to be repaid.
However, this does not mean the money can be used for anything you want. These grants fund very specific business needs, and the funds must be used exactly as outlined in the approval terms. If they are misused, the government may require repayment.
Partial Contribution Government Grants
Partial contribution grants work similarly to non-repayable grants, but with one key difference: you must contribute a portion of the funding yourself.
Think of it as a partnership.
For example, if you need $100,000, the government may provide $50,000 as a non-repayable grant, but require that you contribute the remaining $50,000.
The required contribution percentage varies depending on the program and business.
Conditionally Repayable Government Grants
Conditionally repayable grants are another excellent source of funding. While often considered “free money,” they do come with conditions that determine if and when repayment is required.
These conditions may include:
- No repayment until the business becomes profitable
- Partial repayment after three years of profitability
- Repayment of only a small percentage (e.g., 10%) of the total grant
These terms are set by the granting agency and can sometimes be negotiated. Be sure to review and understand the conditions before accepting a conditionally repayable grant.
Are Government Grants Right for Your Business?
As a small business owner in Canada seeking funding for startup or expansion, government grants are definitely worth exploring.
However, grants may not always be suitable depending on your location, industry, and specific funding needs. Some businesses may qualify for many grant programs, while others may not qualify for any.
To determine whether government grants are a good fit for you, it is best to speak with a Canada Startups funding expert. They can help assess your business needs and guide you toward the right funding opportunities.