3 Types of Government Grants for Small Businesses

Government grants, what a wonderful concept invented by the government to help.

I mean, who doesn’t want a grant. It’s free money for you to do whatever you want for your small business. You never have to pay it back.

Right…..?

According to most people we ask, yes. But then again, those people we ask are coming here to learn what government grants and loans really are. So why should we take their word for it? I mean, we are the experts….

So, government grants for small businesses. Do they exist?

Yes they do.

Who offers these so called “government grants”?

The Canadian government, through it’s various levels of the government. Meaning, local, provincial and federal.

Is it really money that I don’t have to pay back and what I can do anything with?

Not at all. The money, especially a government grant is closely monitored and has strict guidelines. So, don’t think that you can go ahead and buy that Armani suit and think you can just walk away with it.

Government grant (are free money), in the sense of that the government gives it to you, often not asking for anything in return. Unless the conditions ask for it.

But remember that not all government grants are equal. There are many different types of government grants, but the 3 main ones that we are going to be talking about are: non repayable government grants, repayable government grants and partial contribution government grants.

So what does each one mean?

Non Repayable Government Grants

These are the government grants that everyone wants. They are also the hardest to get. These grant are the true non repayable grants, meaning you get the money for what you need, and you simply use it towards your business with no concern of having to pay it back (ever).

You do have to use it for what you applied for (purchase tools/equipment, hiring, training..etc).

Conditionally Repayable Government Grants

The repayable government grants are still way better to obtain than a loan. They often come with conditions attached with them. The conditions can vary from person to person, from business to business, from industry to industry.

Sometimes the conditions can be very simple such as once your business starts to turn a profit, a percentage of that profit goes towards paying off the grant. Other times the conditions can be very elaborate, but they are often set by both sides (you and the government), so it gives you some room to negotiate your deal.

Partial Contribution Government Grants

Partial contributions are often considered the scary government grants. Why? They are free money that doesn’t have to be paid back, however the condition is that you put up some of your own money. Sort of like the government being your business partner and telling you “i’ll invest $50,000 if you match it”. This is sort of an insurance policy for the government. They will give you the money you don’t need to payback, but they want to ensure that you have some money in the business as well, so if it gets tough, they aren’t the only ones out of money.

As much as government grants are great, and any business owner in Canada would be lucky to obtain them, they are much harder to obtain in comparison to government loans. Considering multiple funding sources, and funding program types allows you as a business owner greater chances of getting funded.