How to Get More Funding with Canadian Small Business Grants
The information provided below is for informational purposes only, is not intended to be construed as legal or any other type of professional advice or guidance and may not be accurate or suitable for your specific situation.
Both the federal and provincial/territorial governments offer Canadian small business grants. The range of these programs is so large that there is likely to be something on offer for most small businesses. Check eligibility criteria carefully and make your application at the right time and in the right way.
Both the federal government and the provinces/territories have schemes to help provide funding for small businesses. Many are in the form of non-repayable grants. There are also loans and capital investments available.
Here is a quick guide on how to get more funding with Canadian small business grants.
Find the right funding option
Between the federal and provincial/territorial schemes, Canada has a huge range of financing options for small businesses. The easiest way to find the right options is to look at a grant hub. These have tools for you to filter down to the financing options that fit your business.
There is also Fundingportal. This is not Canada-specific but it does list Canadian options along with options for the US and the UK.
Understand what funding options mean
Business funding options boil down to grants, loans and investment.
For start-ups, investment usually takes the form of venture capital. For larger companies, it may involve issuing shares. For enterprises, it may involve floating on the stock market (or even on global stock markets). Here is a quick look at what each of these options means in practice.
On the surface, grants seem like the perfect financing option. They are quite literally free money. Unfortunately, grants have their disadvantages too. Here are the main ones.
They generally have strict eligibility requirements
They are typically made available for specific purposes (e.g. innovation)
They often provide only partial funding (e.g. half the cost of a project)
The application process can be time-consuming
Demand is often high, meaning the process is competitive
Grant-awarding bodies tend to operate very slowly
Using grant financing may create an extra administrative burden. For example, you may be required to submit progress reports.
For most entrepreneurs, grant funding is likely to be bonus financing. The default financing options are likely to be loans and capital investment.
The disadvantage of loans is, of course, that they need to be paid back. The main advantage of loans is that they’re relatively easy to get. Unfortunately, the key word is “relatively”.
Start-ups can find it challenging to access loans because they have no credit score, or a very low credit score. Even some established small businesses may struggle to get financing because of concerns about their income. These concerns may relate to overall trends in their industry sector, rather than the company itself.
Generally, the way this is resolved is for the entrepreneur (or someone connected with them) to provide a personal guarantee. This is usually backed by proof of income or some form of security (e.g. property).
It’s also worth noting that, over time, both of these issues tend to resolve themselves. Start-ups build up a credit history. Small businesses in cyclical industries prove that they can survive through challenging times as well as straightforward ones.
Government-backed loans versus commercial loans
The government offers several low-interest loans via the Business Development Bank of Canada (BDC). These can offer much more attractive rates than commercial loans, but are still much easier to get than business grants. For some small businesses, they can also be easier to get than commercial loans.
If your small business cannot qualify for these, check credit unions or peer-to-peer lenders in the first instance.
If you still cannot find a suitable loan option for your small business, speak to a broker with a much broader knowledge of what is on the market. They may be able to find more niche options you might not have thought of yourself.
The main advantage of investment is that it does not need to be paid back. Its main potential disadvantage is that you need to give up some control of your small business. On the other hand, if the investor is bringing extra value to the table (e.g. industry connections), this may actually be a benefit.
Again, the government does have some options for capital investment. It’s definitely advisable for entrepreneurs to investigate these alongside the regular private options.
How to apply for small business grant funding
If you decide to apply for small business grant funding, here are five important tips to help.
Check that you meet the eligibility criteria
Go past the headlines into the small print before you even start your application. Check that you really do meet every required criterion. If you fall short of just one, however insignificant, your application will be refused.
Make sure you’re clear on what terms mean in practice. For example, if a grant is to support “innovation”, what does the awarding body actually mean by that?
Check the application process
There are three key points you need to know.
When is the program open for applications?
What exactly is the process for applying?
What supporting documentation do you need?
If a program is open for applications all year round, then find out when the program gets its own funding. Try to time your application to arrive immediately after it receives its funding allocation.
Read the application form carefully
This sounds like stating the obvious, but it can be surprisingly easy to overlook, especially if you’re filling in multiple applications.
Read the application form carefully and supply all the information requested as completely as possible. Pay attention to spelling, grammar, punctuation and formatting. Make your application as easy to read as you can.
If you need to send in supporting documentation, send exactly the right documentation in exactly the right format. In particular, check and see if any documentation has to be dated within a particular time. Comply with all the requirements.
Customize your applications
If you’re applying for multiple grants, there will be a certain level of repetition in your applications. Try to keep this to a minimum. As much as you can, tailor your application to the awarding body.
Check that your application has been received
Most applications can be submitted online or sent by email. Keep track of what you send and make sure that you get an acknowledgement for each submission. If you don’t, follow it up. Applications can sometimes get lost, even if they’re submitted through an online form.