Government grants to small business – a.k.a. free money – go unused

When Erin Bury wants to hire an intern or offer extra employee training at her Toronto-based communications firm, one of the first checks she does is to see whether there’s a grant for it.

Ms. Bury’s company has tapped into about $100,000 in government grants over the past five years. She has used the money to hire additional staff and improve employees’ professional development in areas such as project management and public speaking.

“I’m not sure why more people don’t use grants,” says Ms. Bury, the managing director of Eighty-Eight, an agency that works with startups and technology firms. “It’s free money.”

Her company earmarks money in its budget for education and training, but it could never amount to as much as she has been able to spend by applying for and accessing government grants. The grants not only help her to attract and retain workers who are hungry for professional development but also provide staff with additional skills that help to build the business.

Applying for government incentives is standard procedure in industries such as technology and innovation – driven by popular programs such the Scientific Research & Experimental Development (SR&ED) and the Industrial Research Assistance Program (IRAP) – but experts say not enough companies across all sectors are taking advantage of monies for hiring, education and training.

There are about 4,500 grants and incentives programs for businesses and other organizations valued at about $26-billion a year in Canada, says Teri Kirk, founder and president of Fundingportal, which helps companies find and apply for grants. Some are massively oversubscribed, such as IRAP, while others don’t have enough applicants.

For many companies, the process of applying for government incentives can be both intimidating and overwhelming. “Awareness is low and complexity is high for companies trying to find and apply for these programs,” Ms. Kirk says.

Ottawa provides a comprehensive list on its business grants and financing website. Still, experts say many companies are unaware of the numerous programs they’re eligible for, or they simply don’t take the time to research them and apply.

When they do make the effort, and their applications are successful, the additional money can go a long way to help them achieve their goals, says Chris Casemore, director of client management and development at Mentor Works Ltd., a for-profit consulting company that helps businesses discover grants they can apply for and supports them through the application process.

“What we hear all of the time from clients is, ‘We should’ve started this sooner,’ ” Mr. Casemore says. “Business owners should be using this as an alternative financing source and should be integrating it into their strategic planning – and they should be doing it now. This funding is there specifically to help them grow.”

Businesses can choose between two main types of government incentives: retroactive, which provide tax incentives, and proactive, in which the applicant receives approval for funding upfront and is reimbursed as the funded project is carried out.

Mr. Casemore breaks down the available grants further into four main categories: hiring and training; capital and tech adoption; business expansion including exporting; and research and development and innovation.

Hiring and training are the most accessible for young businesses, Mr. Casemore says. Canada Job Grant, for instance, covers at least half of eligible costs of training employees on the payroll. The percentage of funding varies depending on company size. Coverage can be 100 per cent if any of the trainees were recently unemployed.

“It’s basically training anyone within your organization on transferable skills to help with their employability. We often see this used for leadership training, communication or sales processes,” he says.

Many hiring grants are available throughout the year, often for a certain period of time, Mr. Casemore says. They usually cover about 50 to 70 per cent of the wage of someone being brought on to the payroll. Many programs are for recent postsecondary graduates or students with relevant work experience.

“Most are first-come, first-served,” he says.

With any grant, it’s important to know the timelines. He cautions companies not to bring the new hire onto the payroll before they have been accepted for funding, since it could disqualify the job candidate from the subsidy.

Businesses can receive more than one grant for a project, but they need to be aware of funding limits.

“It’s important to look at each program and whether it supports ‘stacking’ with other government incentives and what they allow, especially if you’re using a combination of tax incentives as well as provincial and federal funds,” he says.

Mr. Casemore also says businesses should treat every section of the application as though it’s critical.

“Many programs are very competitive and only the best applications come through,” he says. “It’s important to look at the objective of the program and … to have a competitive application.”

Mr. Casemore says the Canada Job Grant program has variants in all provinces except Quebec. Each provincial offering has slight differences; recently in B.C., for example, the grant was revamped under the name BC Employer Training Grant, with new focuses and funding details.

Ontario also offers two export marketing grants: the Export Market Access program, an Ontario provincial grant, and CanExport, offered via the federal government. Mr. Casemore says the two support similar export-development activities but have different eligibility criteria. For example, CanExport is specific to new export countries, whereas Export Market Access allows activity in current export markets to be expanded.

To check out a variety of provincial and federal programs, click here for a table of available funding programs on the Mentor Works site.