A business grant is money from the government or a corporate fund that is given to a business or nonprofit organization to help finance work for a specific purpose.

Since it is not a loan, a grant does not need to be repaid. And unlike other sources of funding like venture capital, a grant doesn't require the business to give up equity to investors. However, there are often criteria you must meet in order to qualify. Applicants must also demonstrate that they will use the grant for a specific purpose or to achieve a goal outlined by the grant program.

Many business grant programs in Canada have a stipulation: They require the business (or an entity providing support on its behalf) to designate matching funds or subsidies.

Many funding agencies believe businesses are more motivated to succeed if they have “skin in the game" by putting some of their own money into the endeavor. This may be a challenge for those seeking a grant to start a business in Canada, as new or unestablished businesses are less likely to already have considerable capital available.

Types of business grants

The Government of Canada offers a range of grant programs available to help business owners and entrepreneurs. Also, provinces and municipalities tend to have their own grant programs for businesses in their region.

At the federal level, the Canadian government offers different types of business grants for a variety of purposes, including:

• Technological innovation
• Research and development
• Environmental benefits, such as reducing pollution or making products/processes more energy-efficient
• Starting or growing a business
• Hiring employees
• Supporting the local economy
• Implementing programs that promote health, safety, or productivity

Narrowly focused programs may limit their scope to a particular industry or cause, health concern or geographic region.

How to get a grant to start a business in Canada

To get a grant to start or expand a business in Canada, carefully follow the process outlined by that specific program or department. You will need to submit an application or package of materials, and often supplemental documentation is required, as well. Be prepared: it can be a time-consuming process, especially for the larger grants that often involve a comprehensive application package.

Some tips for helping you apply for small business grant:

• Target your search. The key is to identify opportunities that are the best match for your business and for which you would make a strong contender. Use databases like those at the Government of Canada website, which helps make it easy to search and filter your results.
• Read all instructions carefully. Your application may be discarded or deemed ineligible if you miss a mandatory step. Pay particular attention to deadlines and details about how and where you must submit your materials.
• Consider enlisting expert help. If you don't have a grant writer or someone with proposal writing experience on staff, it may be worthwhile to hire a consultant with this expertise.

Some grant programs are highly competitive, so it's to your benefit to spend time on this part of the process and ensure your application package is the best it can be to help increase your odds of success.

Government grants to start a business

Many business grants are devoted to a few primary functions:

Innovation and research. Many of the largest grant programs in Canada are geared toward supporting research and development of creative, cutting-edge processes or programs. The government has an interest in promoting innovative developments that help the environment, promote a healthier way of life or benefit the community or society in some way.

• Who can apply: Requirements depend on the individual program or funding organization, but common recipients include businesses involved in technology, medical research and environmental projects.

Hiring/wages. A common type of business grant is one in which the funds are earmarked for hiring new employees or funding payroll to maintain the current workforce.

• Who can apply: Businesses that show a critical need to fund the on-boarding of initial staff or the funds to cover existing labor costs.

Nonprofits. Nonprofits have an unusual situation when applying for a business grant because their goal generally isn't tied to making a profit. Instead, they are usually providing some kind of service or benefit to the community, such as addressing a need or providing resources to solve a problem. The nonprofit's mission would usually align with a high-priority focus of the grant-providing entity.

• Who can apply: Organizations in Canada that have fulfilled the requirements to receive a nonprofit designation.

Expansion. Grants for expansion are an option for businesses with a successful track record that want to increase production or widen their operations into new territories. Some grants are specifically focused on businesses that want to expand into an international market.

• Who can apply: Applicants with good odds will have a strong track record, and a solid plan for profitable growth.

Given the amount of work involved in applying for a grant, you don't want to waste your time pursuing grants for which your business or project aren't a good fit. Do your research and focus on targeting grant opportunities that align well with your business and its goals.

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This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.