As profitable as the construction industry can be, plenty of expenses come with owning a construction business. You need to plan for labour costs, materials, heavy-duty equipment, vehicles, and insurance, to name just a few of the most common overhead expenses. To help small construction businesses take off, the government has several funding options to cover the cost of daily operations.
The Business Development Bank of Canada
The Business Development Bank of Canada, a federal Crown corporation, offers many business financing options, such as loans, venture capital, and turnkey financing. The bank’s standard small business loans are available for up to $100,000 and require you to have been in business for at least two years. If you’re eligible, you can submit your application online and get a response within five business days. If your business hasn’t been around for two years, the Business Development Bank also has startup financing options.
Venture capital investments through this bank tend to be much higher, anywhere from $250,000 to $3 million. The selection process is strict, though, so a loan is the more realistic option for most businesses.
The Canada Small Business Financing Program
The federal government sponsors the Canada Small Business Financing Program to make approval for loans easier for business owners. Through this program, a regular financial institution issues the loan, but the government assumes some of the loan’s risk.
To quality for this program, you must have a for-profit business with gross annual revenues of no more than $10 million. The maximum amount you can borrow is $1 million, and there are rules on how you use your loan money. You’re free to put your loan towards purchasing or improving business equipment or commercial property, but you can’t use it to buy inventory, conduct research and development, or as working capital.
The application process and terms of your loan depend on the financial institution. The Government of Canada has a locator tool to help you find a lender in your area.
Government Grants and Benefits for Apprentice Hires
For certain types of construction, you can qualify for government benefits by hiring an apprentice, including a grant and tax credit. This option is ideal if your business needs specialized or skilled labour. In Ontario, you submit an application for a $1,000 taxable cash grant after an apprentice you’ve chosen completes all required training, including both on-the-job training and school courses, and gets a certification. Employment Ontario sends you the application when you become eligible for the grant.
Tax credits are available throughout Canada for the salaries and wages you pay an apprentice. The Apprenticeship Job Creation Tax Credit covers 10% of those salaries and wages per year with a $2,000 maximum credit. Certain areas, including Ontario, have higher credit amounts.
Taking full advantage of the government funding available for your business can help you stretch your budget further and expand your operations faster. If your construction business qualifies for an easy loan or credit, you don’t want to overlook it.