The Truth About Small Business Grants in Canada

True Government Grants for Small Businesses Are Hard to Find

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Many small business operators want government grants (i.e., funds provided to start or expand a qualifying small-to-medium-enterprise (SME) that do not need to be paid back). These grants are different than small business loans, which do have to be paid back.

Unfortunately, the federal government prefers to invest in the small business by operating loans programs, or assistance programs, that involve some sort of shared contribution rather than in small business grant programs.

Very Few Grants Are Actually Free Money

Free money is what most people are looking for when looking for a grant, especially if they need money to start a business. Unfortunately, almost all the government grants available have strings attached.

For instance, in many cases, small business grants require a financial investment by the applicant. So, although the grant itself doesn't need to be paid back, in order to get the grant you have to put down your own money first. The funders see your investment as demonstrating a commitment. An investment of 10–20 percent is standard. 

Job creation is another attached string in order to receive a government grant to start a new business. For instance, one of the guidelines for the Northern Business Opportunity Program - Small Business Start-up Projects reads: 

"The proposed new business will operate on a full-time basis and result in job creation in Northern Ontario."

Government Grants Are Extremely Specific

The government's purpose in providing grants to businesses is to spur the development of particular businesses in particular places. They might, for instance, be focused on creating a biotech hub in Ontario or increasing the number of call centers in Nova Scotia.

This works if you're involved in any of the industries the government is interested in spurring on. However, most people who start businesses in Canada want to start small retail businesses such as bakeries, clothing stores, and bookshops. 

Additionally, small business grants are often only available to individuals of a certain demographic who reside in a particular place, as well as being tied to a particular condition of a business or certain industry.

These examples of small business grants in Canada will serve as examples:

Small Business Grants for Particular Places and People

  • Grants to Small Business Program Northwest Territories – These small business grants are for small businesses, co-operatives, partnerships or sole proprietorships with less than $500,000 in gross sales. Through the SEED Entrepreneur Support Program, All NWT Businesses are eligible for up to $15,000 per year in assistance to assist with costs associated with Start-up, Capital Assistance, Operational Support, and Market Development and Product Promotion.

Small Business Grants for Particular Industries

Particular industries have the edge when it comes to small business grants. For instance:

  • AgriMarketing — SME Component  – SMEs that are part of the agriculture, agri-food, fish, or seafood sectors may be eligible for funding of up to $250,000. Eligible projects must aim to develop new export markets or further penetrate existing export markets. To be eligible, your company must have annual sales of no more than $50 million, have completed market research, be export and market ready, and contribute a minimum of 50 percent of the project costs.
  • Centre of Excellence in Next Generation Networks (CENGN)  – Technical and financial support equivalent to $50,000 to $100,000 is available to businesses and researchers "looking to accelerate the commercialization of your innovative communications technology, products, applications or services." Qualifying fields include Software Defined Network; Network Function Virtualization; SD WAN; Internet of Things/Smart City Applications; Data Centre/Cloud; Network transport, applications, or mobility, and Security.

Partial Canadian Small Business Grant Programs

You will get some “free” money with the following grant programs, though you'll have to put up some of your own money:

  • Toronto Region Sustainability Program – The purpose of the Toronto Region Sustainability Program is to cut down on the amount of smog, greenhouse gases, toxic releases to the air and sewers, and hazardous wastes which threaten the region’s environmental health. To this end, the program provides one-stop pollution prevention technical assistance for SME manufacturers in the Greater Toronto Area (GTA), and a 50 percent cost-share funding incentive, up to a maximum of $5,000.
  • Bioenterprise Seed Funding Program – Businesses in the agriculture, agri-food, sustainable, or environmental technology sectors in southern Ontario could access up to $30,000 in seed funding as well as coaching and mentorship support services. Applicants must match the grant with their own financial contribution.

The Best Canadian Small Business Grants of All

While small business grants with no strings attached are few and far between, even better financial assistance is available, in the form of programs.

But there's one caveat. You must be willing to make the required contribution (often sweat equity) and demonstrate your level of commitment. If you do that, these programs offer small business funding as well as training and/or mentoring, which can make the difference between success and failure.

  • Self Employment Program – What makes this program so outstanding is the level of support provided. Participants not only get help in creating a business plan but receive income support while they do it for up to a year (or 78 weeks for a person with a disability). You have to be Employment Insurance eligible to apply.
  • Summer Company – Students in Ontario aged 15 to 29 can receive small business grants (i.e, awards) of up to $3,000 as well as hands-on entrepreneur training and support to run their own summer businesses. Applicants must not be eligible for other self-employment programs, such as the Ontario Self-Employment Benefit.