Government grants are funding program types that are offered by the Canadian government in order to help small business owners obtain funds to use towards their business.
These funds, once provided by the various levels of the government, can be used towards a number of needs a business owner may have. Generally speaking however, the government offers government loans in order to create jobs, boost the economy, support the community the business is in, and support entrepreneurship across the country.
Often misunderstood, government grants are generally considered free money options that small business owners can take on, with no concern for repayment. That being said, government grants can come in a number of different forms, including:
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- One time and renewable grants
- Non repayable grants
- Partial contributions
Using government grants can be beneficial to any small business that is eligible and able to obtain them. These funds can be used for a number of different purposes, which we will explain further in the article. Before we do, let’s discuss the different government grant options to give you a better idea of what you may want or need.
Different government grants
Most people hear the term “grant” and assume that these are funds that are simply given by the government. While this is true, there are many different types of grants that should be understood.
One time government grants are grant programs, often offered by local, provincial, and federal governments, that help fund business expenses which require a one time contribution.
These grants are often focused on helping with a specific funding requirement a business may have, such as renovating a business location to accommodate its needs. These renovation expenses are one time.
Whereas renewable government grants are grant options that a business may apply to multiple times if funds are needed. While it is not guaranteed that funds will be approved each time, a business may use these funds for recurring expenses such as paying wages, providing staff training, and energy and efficiency purposes.
Further, the most popular programs are the non repayable government grants. These grant options are the most desired as they are non-repayable.
What this means for a business is that the funds can be used without the need to repay them. The government agency providing these non repayable grants hopes in return that you will achieve success with your business, create jobs, and pay taxes.
Lastly, there are partial contribution grants. These grant program types are available but are often avoided by business owners because they require a contribution from the business owner in order to be eligible.
A partial contribution means that if you want to obtain this grant, you must also invest some of your own funds. This investment can range from as little as 10% to as high as 85%.
Most startups and business owners need funding because they lack sufficient funds of their own, which can make partial contribution grants difficult to obtain or consider.
What can government grants be used for?
This is a great question and often one that has confusing answers, so let’s clear this up.
Government grants can be used for a number of different purposes. However, this is not set in stone, and not every business will have the same outcome. It is important to understand that:
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Not all government grants are for everyone or for every type of business
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Government grants are designed to ensure that more than just your business benefits
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To understand what a grant is for and how the funds can be used, review the application and program requirements
There are hundreds of government grants across the country. While these grant programs are often considered free money, not everyone is eligible and not all funding needs can be covered.
Generally speaking, government grants focus on funding business needs that align with the mission statement of the agency offering the program. It is crucial to review the application requirements and criteria before applying.
Government grant agencies exist for specific purposes and have specific goals, often tied directly to their mission statements.
Some grant programs focus on the environment, others on job creation, and others on technology. Understanding these purposes will help determine how to best use the funds and how to obtain them.
Most grant programs will help cover the following costs:
- Wage support (money to pay yourself or your staff)
- Training costs for staff development
- Tools and equipment costs
- Energy efficiency and environmental improvements
- Research and development costs
- Leasehold improvements and renovation costs
In addition to these uses, some government grant programs may also assist with marketing costs, inventory, supplies, business acquisition, and more.
To explore available government grant options and determine how you can benefit, use the Funding Database.
Tips for government grants
Before starting the government grant application process, consider the following tips:
- Prepare your business plan beforehand.
- Ensure your business plan is detailed and includes a breakdown of funding needs.
- Have your three-year projections ready and be prepared to explain how the grant will help. When you find a grant program, read the application and requirements carefully. Ask yourself:
- Does this grant cover businesses in your location?
- Is the grant suitable for your industry?
- Can your funding needs be covered by this program?
- Is the amount of money you need achievable?
If you have addressed these points, you are ready to move forward and apply for grant programs.
Keep in mind that alternative government funding options are also available, including government loans, guaranteed loans, tax breaks, and credits. These can be used alongside grants. View all options in the Funding Database.