Small Business Grants in Canada

Running a small business in Canada is truly rewarding, however, it can also be extremely expensive. Costs such as equipment, employing staff, advertising and marketing, competitive research, and expansion can add up quickly. Although you can always take a loan, there’s something attractive about alternative-funding where you don’t have to pay back.

That’s what small business grants are all about. Free money from the government, Crown corporations and any other sources to grow your business, hire, design new products or open new markets. 

Grants are out there for all Canadian businesses, regardless of size and business field. The main difficulties are knowing what exists, what you qualify for, and how to put out a persuasive application.

Not to worry, you’ll find it all in this guide. After reading this, you will understand small business grants in Canada, learn the most useful programs to apply for, and know how to develop a funding plan to provide your small business the maximum opportunity for commercial success.

How small business grants work in Canada

Nothing’s more helpful than a quick overview of what a grant really is before you get into the nitty-gritty of specific programs.

What makes a grant different from other funding

A grant is a sum of money allocated to your business that you don’t have to pay back (non-repayable). It is awarded for the purpose of helping you meet a particular goal. There’s no need for repayment as with a loan. It’s also not the same as selling equity in your business, as you won’t lose any ownership. 

You’ll be given the money to use for a specific purpose, after which you’ll report back to the funding authority or body how you spent it. It’s important to note that grants for small businesses are not completely free. They have conditions that require you to meet specific criteria that provide restrictions on how you use the money. They also have requirements on how you report your spending. 

In some cases, the funders have an expectation of matching fundings – that is, you have to invest some of your own cash into the project, alongside the grant. It’s also worth distinguishing grants from other types of small business funding you’ll encounter:

Loans should be paid back with interest, though many government-assisted loans are usually very useful since the rates of interest are relatively lesser, when compared with commercial loan providers.

Tax credits don’t come in the form of cash directly. Rather, they reduce the amount you owe the government, which keeps your money working in your business longer. An excellent example is the SR&ED tax credit. 

A wage subsidy can be used to offset a percentage of your wages. Sometimes they are targeted at certain groups such as youth, new Canadians or disabled persons.

A Repayable contribution is a hybrid – it is similar to a grant but it has a pay-back on, that is often only repaid if your project is successful in commercial terms.

It’s important to recognize these differences, because the programs were designed to address different needs, and applying to the wrong one might well waste your time. 

Why governments and organisations offer grants

Grants aren’t charity – they’re strategic investments. When a government funds a small business with a grant, it’s typically because that business is doing something that serves a broader public interest, such as:

• Generating employment within the local economy
• Innovation/New technology OR intellectual property developed in Canada
• Access to export markets and inflows of foreign currency.
• Aiding marginalized populations such as women, native people, recent immigrants
• Emerging sectors prioritized by government

In general terms therefore, grants represent how governments allocate funds according to their policy priorities. The closer a business fits with those priorities, the greater its likelihood of accessing resources.

How grant funding is allocated

Most grant programs run on a budget cycle: 

• Funding availability is announced, 
• a period for application is opened, 
• and funds are distributed between qualified grantees. This is either on a first-come first-served basis, or through a competitive review process. 

While a few grant programs run on an ongoing basis, most are open only once a year, or during certain application windows. A few programs accept applications by invitation only. 

These differences are a reason to always be tracking what programs are offering. Grant opportunities open and close throughout the year at different times; hence, a close follow-up will prove very helpful.

Main categories of small business grants

There are many small business grants available within Canada. They all tend to fall into broad groups as you will see below, so finding out your appropriate category is the first stage.

Innovation and R&D grants

These programs provide grants to companies working on new products, processes, or technologies. If you’re doing research, creating something never created before, or trying new ways to address existing issues, you’ll probably find an innovation grant to help you.

There is often an overlap between programs in this area and tax incentives such as SR&ED, and the two can work together to give you the best return on your R&D investment.

Hiring and wage subsidy programs

One of the most expensive areas for a small business is employment. Wage subsidy schemes can assist organizations in covering some aspects of their wage costs. These may be offered at the time of employment for a predetermined duration, or on an ongoing basis.

As an employer, you can also target grant programs aimed at specific recruiting groups such as students and recent graduates, apprentices, employees with disabilities or needs, newcomers to Canada or recently unemployed workers. It’ll help to find out if any of your newly hired workers are eligible for a wage subsidy.

Export and international growth grants

For Canadian businesses looking to expand into international markets, a variety of programs are available to help cover some of the costs of becoming an exporter. Assistance may include funding for travel to trade shows, conducting market research, gaining international certifications, and developing an export plan.

The principle is straightforward: every dollar that a Canadian business makes through its exports, that is, through its sales to foreigners, is money that is pouring into the Canadian economy. Governments have a lot to gain by supporting such kinds of businesses.

Training and workforce development grants

These programs enable investment in your people – paying for employee training, up-skilling initiatives, apprenticeships and training schemes in key skills and professional development. In today’s rapidly evolving economy, this is just what your business needs.

Regional and municipal support programs

In addition to federal and provincial programs, there are a variety of small business funding options offered by different municipalities, regional development agencies, and other local economic development organizations. Although smaller in dollar amounts, these sources are often less competitive and generally easier to access, especially for businesses in rural or underserved communities.

Federal grant programs worth knowing

Here is a snapshot of the largest federal government funding programs for small businesses.

Canada Small Business Financing Program (CSBFP)

Although technically a loan program and not a grant, the Canada Small Business Financing Program is so popular and worth mentioning. Business owners can access funding from lenders, and the federal government will cover some of the loan’s risk. This structure helps many businesses that might not qualify for the usual grant funding. 

Industrial Research Assistance Program (IRAP)

Supported by the National Research Council, IRAP offers funding and technical advisory support to small and medium-sized businesses working on technological innovation. It’s top of mind for many Canadian entrepreneurs simply because of the technical advisor support that also accompanies the funding.

IRAP engages with companies, in all stages of development and from many different industries. If you are doing anything in the technology or innovation space, you should consider this a priority. 

CanExport SMEs

CanExport is provided by the Trade Commissioner Service to support small and medium-sized enterprises in finding new markets for their exports. CanExport provides assistance towards the cost of eligible activities such as market research, trade missions, lawyer’s fees for international treaties and attendance to international trade fairs.

It is a project grant and you have to match some of the costs on your own. But if you’re keen on international expansion for your business, it is one of the easiest federal programs to get.

Canada Job Grant

A joint federal-provincial program established to assist employers pay for the training of existing and new employees. Generally, employers will be reimbursed for training costs, with the federal/provincial governments sharing the remaining costs.

Details differ from one province to another as provinces have adapted the program – the general idea remains the same: the government provides financial support for training so your business can develop the required workforce.

Women Entrepreneurship Strategy (WES)

This is a collection of programs designed to help and support women-owned and women-led businesses in Canada. WES comprises direct funding, numerous loan programs, and ecosystem support through organizations all across Canada. If you are a female entrepreneur, it is definitely worth looking into WES programs – the ecosystem of support is vast!

Futurpreneur Canada

This program focuses on entrepreneurs between the ages of 18-39. Futurpreneur provides startup loans and mentorship programs. Though it is a loan program, the addition of mentorship and access to a network makes it similar to a startup support program.

Provincial and Regional funding programs

For every province, there is a thriving world of funding surrounding small business. In many cases, different programs at the provincial level hold just as much worth, or even more so, than federal programs. Take a look at the regional breakdown.

Ontario

Ontario manages many different initiatives through the Ministry of Economic Development, as well as a number of other organisations such as the Ontario Centre of Innovation (OCI) and the Northern Ontario Heritage Fund Corporation (NOHFC). Ontario is particular about supporting technology, manufacturing or rural economic development.

Quebec

Quebec is home to one of the most vibrant small business funding scenes in the country with significant backing from Investissement Quebec and the provincial government. Programs in Quebec lean toward sectors of innovation, exports and the cultural industries of Quebec.

British Columbia

Support for BC’s small business ecosystem is provided by the BC Centres for Entrepreneurship, Innovate BC, as well as various regional agencies. The most promising industries currently are the tech startup and clean energy sectors.

Atlantic Canada

The Atlantic Canada Opportunities Agency (ACOA) is the major engines of federal support in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. ACOA programs tend to be more user friendly than national ones, and span a range of activities, including business development and economy building at the community level.

Prairie Provinces

These are provincially funded programs in Alberta, Saskatchewan and Manitoba, with additional support coming from the Prairies Economic Development Canada agency (earlier Western Economic Diversification). Agriculture, energy and agri-tech companies are well represented in funding targeted to the Prairie-region.

The North

Yukon, Northwest Territories, and Nunavut have established programs through CanNor (Canadian Northern Economic Development Agency) that support indigenous-founded and operated businesses. They do this alongside other projects that promote increased independence of the north’s economy.

Eligibility requirements for small business grants

Grants for small businesses come with a lot of competition. Before you put a lot of time and effort into an application, verify that you meet all the qualifications for funding.

Business size and revenue thresholds

Most small business grants define eligibility based on the number of employees or annual revenue. Definitions vary by program, but a common benchmark is:

• Less than 100 Employees for small business programs
• Less than 500 employees for SME programs
• Income must be below a certain limit (varies widely)

Certain programs are exclusively for very early-stage investment, which includes pre-revenue startups. Other programs stipulate that you must have been operating for some time.

Industry restrictions and priorities

There are also programs that are industry-specific. If you’re a retail business, you won’t be able to apply for a clean technology grant, and an agricultural grant won’t be apply for your software startup.

Check if you are in a compatible industry. Most programs have a list of eligible and ineligible industries, with real estate development, financial services, law or dental practices as common exclusions. 

Innovation, export, or hiring requirements

Project-related grants will likely specify that your intended expenditure must achieve an objective, set by the funding program’s mandate. If you are seeking an export grant, then you will need to show evidence of an actual desire to break into international markets. Innovation grants for small businesses may inquire as to what’s new, uncertain or experimental.

One of the most common mistakes small businesses make is to apply for grants that don’t fit into their purpose – and more often than not, this doesn’t work.

Ownership criteria

Certain programs have criteria as to ownership. Women-based programs have a requirement of majority ownership by women. Indigenous business programs require Indigenous ownership. Youth programs are for entrepreneurs within a certain age range. Social enterprise programs are for businesses with a mission-driven form.

These requirements help direct funds to organizations that have difficulties securing traditional financing due to various structural obstacles. If you are a member of one of these categories, you can access funding with less competition and more support.

How to apply for small business grants

It’s highly important to choose your application wisely. For the same business or project, a weak application may be rejected where a good application will be accepted.

Step 1: Research before you apply

Don’t rush to apply to the first program you come across. Spend time mapping what is available against where you are right now, and see if you can find programs where your work and activities already align well. Avoid programs where you have to squeeze and stretch yourself just to make it feel appropriate.

Step 2: Read the program guidelines carefully

Every grant program publishes guidelines. Read them carefully before you start writing anything. Pay attention to:

• Eligible and ineligible activities
• Maximum and minimum grant amounts
• Matching contribution requirements
• Application deadlines and intake periods
• Expectations for reporting and accountability at post-funding stages

Step 3: Prepare your core documents

Most grant applications require a similar set of documents. Getting these ready before you start applying means you can move quickly when a program opens. Core documents typically include:

• A current business plan
• Financial statements (at least two to three years for existing businesses or projections for newer companies)
• Corporate registration documents
• Information about the project you are requesting funding for
• A clear budget for the funded activities
• Proof of matching contributions (if needed)

Step 4: Write a clear project proposal

This is where most applications either succeed or fail. Your project proposal needs to answer three questions clearly:

What are you doing? If you have a particular activity or project in mind, please explain clearly and specifically, without jargon.

Why does it matter? Tie your project back to the outcomes this program is intended to produce. If it’s a hiring grant, describe how you’ll employ talented individuals and how it benefits your enterprise. If it’s an innovation grant, describe the novelty and why it’s uncertain.

What will you do with the money? It’s important to explain exactly your plans for the money. Overly general budgets or inflated projections spell rejection to reviewers. 

Step 5: Follow-up and stay available

Many programs have a review after your application is submitted. During this phase, their staff might call you to get clarification or more info. Again, respond fast, be gracious and thorough. If you are difficult to reach, or slow to respond, this can hurt your chances (or totally disqualify you if deadlines are missed).

How to improve your approval chances

A few habits make a meaningful difference:

• Don’t wait till it’s close to the deadline date to get things in. Apply early (reviewers seem to engage better with earlier applications much more thoroughly than late ones).
• Be open about where your company or product stands; overestimating your speed of maturity tends to boomerang.
• Customize each application to the specific program you’re applying for. It’s tempting to cut and paste the same similar answers to different applications. However, it’s important to customize the responses towards each program.
• Get someone outside your business to proof-read your proposal before you submit – clarity is vital. 

Strategy: How to maximise your grant success

It’s okay to win one grant. However, developing a systematic approach to your grant funding is better. Here are a few tips you can apply to make your funding process more effective: 

Build a funding roadmap

A funding roadmap is a written plan to align your activities for a period of time with the available funding programs in that duration. This timeline covers both short to medium-term (1-3 years).

For each major initiative (hiring a new employee, running an R&D project, entering a new market), you determine what funding programs are available to you and when to apply. This type of planning allows you to coordinate application deadlines, be prepared with your documentation, and not be caught off guard!

Combine multiple grant sources

You can be awarded multiple grants from different sources, though some programs prohibit having other sources of funding asides theirs. If stacking is allowed, it can significantly increase the percentage of a project funded by outside funds.

For example, a company employing a new graduate could be combining a federal youth employment program with a provincial hiring incentive, and a local economic development grant. This cuts down the net expense of that hire to a large extent. 

Time applications strategically

Most programs operate on an annual budget cycle. The new year of funding usually opens at the beginning of a fiscal year. For federally funded programs, the fiscal year usually begins April 1. 

For provincially funded programs, it varies. Finding out when programs open means having those applications ready to submit when it is time to apply rather than having to quickly cook up something at the last minute.

Track ongoing and renewal programs

While certain grants for small businesses are available only once, others are renewable. So if you’ve been funded in the past, you may be able to apply again. Stay organized and track which programs you’ve gotten grants from, the renewal deadlines, and any reporting you need to do.

Ensure your compliance reporting on past grants is solid, to avoid losing current funds and to secure eligibility for funds in the future.

Conclusion

Small business grants in Canada are real. They are not a scam. They are not just limited to those ‘big’ companies with a team of grant writers on staff. In fact, every year thousands of Canadian businesses receive grant funding to help them hire, grow, innovate, and compete on the world stage.

But grants aren’t easy. They take effort, depth of knowledge, continued persistence and dedication. To be successful in applying for grants, it’s crucial to know about the funding programs available, even the hard-to-find ones. 

Then you must submit well thought-out applications that’ll be successful in getting through the phase reviews. Also ensure to stay compliant with the funders’ rules and be on the look-out for new funding programs.