New or expanding small business owners should always be aware of alternative forms of financing beyond standard bank loans. There are several institutions, organizations and public programs that provide loans or equity raises for small businesses. Government grants allow a business to increase its pool of capital without incurring debt or diluting ownership.
Learn more about government grants, and find out why they exist and what it takes to qualify for public funds that might propel your business to the next level.
Government Grants: What and Why?
Government grants are not free money. In their simplest forms, government grants are direct transfers of money away from taxpayers and to select businesses. Grants are part of social engineering for the economy with a goal of creating the kind of business climate that policymakers deem to be valuable.
This means most funding programs have very strict requirements about which companies may receive funds and even how recipients can use grant money. If your company, stated objectives, demographic composition, or size do not conform with the goals of the grant, then there is very little chance you will receive the grant.
Qualifying for a Government Grant
As exciting and promising as government grants may sound, the process of finding and applying for the right grant can be complex and challenging. There are very few simple grants out there; many require matching contributions or that your business qualify for an additional subsidy. Grants are frequently very particular about potential recipients.
Some grants require that your business is at least 50 percent female-owned. Others demand that the owner be under the age of 30 or that you provide a specific service to a specific subset of the population. Good information sources about grants can be difficult to find so remember to be patient with the process.
Kinds of Government Grants
Grants can exist at the federal level, provincial level, territorial level or local level. You are always more likely to receive a grant that was established by lower levels of government that are located near your operation. If you are a small business owner in Alberta, for instance, it is unlikely that you’ll be able to qualify for any grants that were created with Quebec in mind.
For example, the Export Market Access program was designed for small businesses in Ontario. Another grant, the Alberta Value Added Corporation program in Alberta, is actually a cooperative effort between the provincial government and private venture capital investors. The Emerging Music Business Program in Nova Scotia is a great example of a program that limits the availability of its grants based on a region and an industry.
Keep an eye on the Canada Business Network for an up-to-date, expansive list of provincial and federal public funding options that your small business might qualify for.