Are you interested in exploring the different grant or loan options the government offers to Canadian business owners – but don’t know where to start? Here’s a summary of the different types of assistance offered and when you should use them.
Canadian business grants are part of the funding programs available from the Canadian Government to help employers with hiring, training, and retaining employees in Canada. This funding can come in different forms. Here are the three basic types of government funding available for Canadian businesses:
- Grants
- Repayable funding/loans
- Tax incentives and refunds
A. Grants: non repayable funding
Application procedure: the application process for most grant programs is usually formal in nature. The procedure requires that all grant recipients must complete, submit, and be accepted for the program.
Focus of the funding: the funding for grant related programs is usually centred on particular project or hire. Capital investment, R&D, business expansion, hiring, and training, all have different grant programs that attend to them.
Timing: the ideal requirement here is that before starting the funding project, application for funding must be carried out and you must be accepted first.
Payback: in grant programs, there is no payback. Some grant programs demand for businesses to attain certain objectives they showcased during the application stage.
When you should use a grant:
- You have not started your project.
- Your project will create/develop jobs, add to economic growth, increase productivity and is full of innovation.
- You have a particular project in your mind.
B. Repayable Funding and Loans (also known as government financing)
Application procedure: this program requires large loan projects to submit a formal business plan in addition to supplementary documentation. There is also a formal application process. For several programs, application process is in multi-phase.
Focus of funding: here, the funding is focused on certain projects. These projects are usually, large scale business expansion or commercialization project.
Timing: the ideal requirement here is that before starting the funding project, application for funding must be carried out and you must be accepted first.
Payback: it all depends on the type of program: it can be competitive interest, low interest or no interest to financial institution. Payback policy depends on the program, some programs expect repayment in 10 years time.
When you should use a government loan:
- If you are ready to submit a comprehensive business plan and supplementary documentation.
- If your project has high level of positive impact such as creating 10+ jobs or commercializing innovative technologies.
- If you have yet to go ahead with the project and you are ready to wait for up to 6 months before you carry out the project after submitting the application.
C. Tax Incentives & Refunds
Application procedure: there are forms dedicated to each tax incentives. Each tax form must be filled and included in the corporation’s tax fillings.
Focus of the funding: there are certain projects designed for this program but the most popular among them all is related to scientific R&D. There are other programs that focus on projects such as digital media, and co-op internships
Timing: you should apply for tax incentives when filling corporate taxes, after you must have carried out the initiatives.
Payback: this program (tax incentives) will compensate tax liabilities in filling to decrease tax.
When you should use Tax Incentive or Refund:
- If you have the inner technical knowledge to complete the technical documentation and support an audit if the need arises (related to scientific R&D tax credit).
- If you have determined the cost already and your accountant/finance unit is filling the corporate taxes.
- You have expense receipts and vivid documentation of all related costs.
We hope that we have offered you a better understanding of these funding programs for you. The above programs are part of the current Canada Job Grant program. If you are interested in finding government grants, loans or financing for your business, use the grant finder from the Canada Business Network here.
If you would like to discuss Canadian business grants or any other issue that relates to employment and training for York Region employers, please contact us.
