How Do Small Business Grants Work?

As a small business in Canada, most likely you’ve heard about the availability of government funding and the various government grants, loans and tax programs. But the question that many entrepreneurs still have is how do small business grants work?

With so many different funding program types available, it can get very confusing as to how they actually work and how they benefit small business owners.

So how do small business grants work?

Before a small business owner (you) completes a funding application and decides to send it in for approval, it’s important to remember the most critical part to any application.

Be sure that you are applying to the correct funding program, for your specific industry, for the specific funding needs and to apply on time – before the deadline.

With so many funding programs available for small business owners across Canada, keep in mind that not all programs fund all types of businesses. There are certain programs that only fund businesses in a specific industry, or a specific location or for specific funding needs. It is important to read over the funding program details and follow the qualifying criteria as well as the eligibility retirements.

Small business grants and small business loans offered by the various government agencies offer funding for multiple purposes of which include:

• Funding to help a small business startup or to expand
• Funding to help a small business hire and train staff
• Funding to help a small business pay for tools, supplies and equipment
• Funding to help pay for marketing and advertising costs
• Funding to help conduct research and development
• Funding to help improve cash flow
• and more…

Since each funding program be it a small business government grant, a government loan or a tax break, it’s always recommended to ensure that the program is right for you and your business before you apply.

The questions to ask before you apply:

• Is this program available for my location?
• Is this program available in my industry?
• Does this program cover the funding needs I have?
• Do I meet the eligibility requirements?
• Can I apply before the deadline?

Once you are successful at locating the proper funding programs, the next step is to apply.

Keep in mind that when applying for a funding program to only apply for funding that you need and that you know you will use.

Since not all programs offered by the government are non repayable grants, it’s important to know the different funding program types and to know what works and what doesn’t work for you.

Note that not all “small business grant” programs are non repayable programs either. Which is one of the general misconceptions that entrepreneurs have about grants.

Grants come in many forms which can include:

• Non repayable: a program where the money received does not have to be paid back ever
• Partial contribution: a program where the govenrment will provide you with non repayable money only if you cover the other part (usually a percentage)
• Conditionally repayable: a program where you are given free money with a condition that it has to be paid back when your business is profitable for example (other conditions can be present)

The funding that you apply for has to be used for that exact funding purpose. So if you plan on applying for funding, be it a small business grant or a loan, keep in mind that it’s important to know how small business grants work and how small business loans work before you go forward with it.

The money that you apply for has to be used for only what you apply for. If you decide after obtaining the funding to use the funds for another purpose, you may be penalized and may be forced to give the money back.

To learn more about how do small business grants work and find funding for your own small business, be sure to contact our experts here at CanadaStartups.