Chapter 12

Small business grants and government loans

Grants are a great funding option for some businesses. They can be a lot of work to get, but the reward is free money.

What is a small business grant?

A grant is money that’s given to your business by the government, a company or a philanthropist. Grants are essentially free money – you don’t have to pay them back. Their aim is to give small businesses a helping hand.

Business grants are a great way to support the creation of jobs, cover specific project costs or cover training costs. Some business grants are available for existing businesses, and many others are available for startup ventures as well.

Apart from Canadian government grants, many philanthropists, investors and organizations such as Innovative Solutions Canada and SDTC Tech Fund also provide funds as part of mentorship or economic development schemes.

What are the advantages of business grants?

Business grants in Canada have many advantages for small businesses.

  • Easy, free money: With no repayment commitments, a non-repayable grant gives you access to a large pot of money with almost no strings attached.
  • Lots of grants available: If you look in the right places and in the right way, there are plenty of funding options available for businesses of any size and purpose today.
  • Targeted at businesses not supported elsewhere: Many grants and funding programs are created to support minorities or those with a specific niche in their industry. Examples include women-owned businesses, Scientific Research and Experimental Development (SR&ED) work and social enterprises supporting sustainability efforts.
  • Potential free publicity: Many business grants publish the names and details of those they are supporting. Grants also help your business gain credibility as you will be seen as the chosen one among a large list of applicants.

What are the disadvantages of business grants?

As with any busines decision, it is important to know all the difficulties that can come with a small business grant.

  • Specific eligibility: Not all businesses can apply for a grant. Each funding scheme will have secific requirements you need to meet. You will also need to specifically define your goals, purpose and future plan for your business.
  • Time consuming to wait and apply for: The application procress for a business grant is exhaustive. You need to conduct thorough research, compile the right paperwork and submit all documentation on time. The waiting time to know about the outcome can be quite long as well.
  • Can have strings attached: With free money could come a few restrictions and conditions. If you tell the funding authority what you are going to use the funds for, you will most likely have to stick with the plan even if you change your mind later. This is usually a blessing in disguise as it keeps you focused and on a schedule.
  • Competition for them is high: With each funding scheme, only a limited number of resources are available. Realistically, a majority of applicants do not get approved, so it is important to keep your funding options open.

Having a good idea of the pros and cons will help you make the right decision for your business.

Who gets them?

Competition for grants is high – everybody wants free financing. You’ll see a lot of them are for non-profits, but keep looking, there are plenty for businesses too.

Small business grants tend to be aimed at certain regions or sectors, specific types of businesses or causes, or particular community groups.

How much is a small business grant?

There are many different business grants with various budgets available across Canada. Many are worth $100,000, but some can go up to $1 million or more.

How do you find them?

Grants can come from every level of government, philanthropists, or companies.

Here's where to check:

  • Government websites – central and local government. They should have a list of their grants and links to other sources like non-profits, foundations and corporations.
  • Small business and industry associations. They may have their own grants or information about grants their members have had success with.
  • Your accountant or bookkeeper. They may have other clients who’ve been successful getting grants.

Small business grants: Canada

The Canadian government has many different incentive programs available as funding support for businesses and entrepreneurship activities. Look for Canadian small business grants based on the location of your business. Some are provided by the federal government and some are unique to each province or territory.

Small business grants: Ontario

Ontario has a wide range of small business grants available to support women, minority groups and business development efforts for all.

Here are two popular grants in the province.

Southwestern Ontario Development Fund (SWODF)

This fund allows applicants to get up to $500k to $5 million in government funding. To be eligible, businesses should provide financial statements for the past 3 years, be located in southwestern Ontario and be in the community economic development space. Full details can be found on the official website.

Federal Economic Development Agency for Northern Ontario (FedNor)

Directed at developing and strengthening the economic growth of Northern Ontario, funds from this financial assistance program can go up to $5 million.

Small business grants: Alberta

A range of grants are available in Alberta to support agriculture, environmental efforts, indigenous communities, innovation and technology sectors and more.

To apply for government grants in Alberta, you may need the following:

  • good credit score across all payments, including mortgages, credit cards, insurance and taxes
  • a solid and thorough business plan that details your goals, financial forecast and purpose
  • financial reports and bank statements from recent years

Refer to the official guidelines from the province for an updated list of requirements and to find the government grant that suits your needs.

Small business grants: British Columbia (BC)

Some of the many grants available for small businesses across BC incorporate the arts, employee training and education, innovation goals and individual entrepreneurs.

British Columbia Employer Training Grant

There is an opportunity to receive up to 80% of training costs in Employer Training Grants. From providing skills training to enable the workforce to adapt to changing job requirements to training new hires, this fund prioritizes first-time applicants and small businesses.

Vancouver Artist Studio Award Program

Business grants don’t always have to be in monetary form. Many are valued in assets and other funding options. This funding option provides emerging artists with studios and work spaces for up to 3 years.

Ignite, by Innovate BC

With up to $300,000 available for research and development, this small business fund is focused on advancing innovations in the applied sciences and engineering space. It’s available for partnerships between academics and companies or organizations.

Small business grants: Manitoba

The province of Manitoba has plenty of small business grants that focus on economic growth and innovation, COVID-19 relief and recovery, technology adoption and employee training.

Go through the province’s official website in detail to find the program you are eligible for.

Small business grants: Nova Scotia

Small business grants are available across Nova Scotia through a number of sources.

Workplace Education Initiative

This program aims to increase productivity, improve business processes and encourage teamwork across an organization.

Business ACCESS-Ability Grant Program

Making accessibility-related improvements is a major focus across the country, and this grant provides up to $100,000 to support businesses that want to do so.

Self Employment (SE) Program

Individuals who start their own businesses can apply to this program if they meet the eligibility requirements.

Are there startup business grants?

There are grants for startups but they’re not going to fund your whole business. They might cover the costs of getting professional advice to create a business or financial plan, specific training, or investment in equipment. They’re aimed at getting your foot on the ladder – it’s still up to you to climb it.

Grants for research and development (R&D) are more plentiful, especially for innovative products and processes. These grants can help you plan, develop, test and refine your idea. They may take you through several stages but ultimately you’ll have to find the final funds to go to market with your concept.

Is a small business grant taxable?

Most business grants should be reported as income and will be considered taxable. Consult an accounting specialist to learn more.

How to apply for a small business grant

The money might be free but you’ll need to show why you deserve it.

Do your research

Take your time to conduct thorough research to find the right business grant to apply for. Many have a deadline you will need to meet, so plan ahead. Having a clear business plan is essential so you know what type of resources to look for.

Don’t rush it

Be prepared to put in some serious time on the application. So read up about what’s required from you before you commit. Check the time frame: how long will it take to apply and get an answer? Can you wait that long or is another source of funding a better idea?

Tailor your application

Do your homework as to why the grant was created and its purpose. Your application should show how your business fits the aims of the grant and how the grant will help your business – and make a wider difference if that is an objective. You want to stand out from the crowd and get the funding authority to take notice of you. The best way to do so is by being authentic, providing personal details and showcasing your passion.

Be thorough

Expect to provide information on yourself as well as your product or service, your market demographics, and how you plan to spend the grant. This may involve charts, graphs, and budgets. Know the strengths of your business so you can impress. Your business plan should have most of the information you need.

Focus on the why, not the how

Anyone can ask for money, but articulating what you need it for and demonstrating your purpose is what can make all the difference. Ultimately, most grants are given for good objectives rather than methods.

Align your budget to your proposal

Provide as many details as possible about how you would be spending the grant funds and how it goes along with your existing budget. It needs to be realistic, measurable and time-oriented.

Write in plain English

Your funding request needs to be understood by almost anyone. You never know who is going to have access to it, and second-language speakers should be able to easily interpret your goals and aspirations.

What’s a BDC loan?

The Business Development Bank of Canada (BDC) is a federal development bank structured as a Crown corporation wholly owned by the Government of Canada. Its mandate is to help create and develop Canadian businesses through financing, growth and transitional capital, venture capital and advisory service with a focus on small and medium-sized enterprises.

BDC offers small business loans to eligible business owners needing quick and easy access to finance. Their loans provide access to the funds at an interest rate they can afford. They can postpone capital payment for the first six months and repay the loan at their own pace over five years. To be eligible, a business needs to be based in Canada, have generated revenues for at least 24 months, have a good credit history and have reached the age of majority in the province or territory where they live.

For more information, visit the BDC page on business loans.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

How to finance your business

Need finance for your business? Learn about the types of finance, approaching lenders and investors and more.

  1. What is business finance?

    Your new business idea is ready to go. Now you need to find the right small business funding. But where do you start?

  2. How much business funding do you need?

    Knowing how much money you need will help you choose the right type of finance. These tips will help you find a number.

  3. Debt versus equity finance

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  4. Main types of finance

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  5. How to get a business loan

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  6. Peer-to-peer lending

    Peer-to-peer lending is an alternative method of getting a business loan. How does it work?

  7. Friends and family loans

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  8. Invoice financing

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  9. How to find investors

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  10. Angel investors versus venture capitalists

    Angel investors and venture capitalists are alternative finance sources. What can they offer your business?

  11. How crowdfunding works

    Crowdfunding can get you the money to build a business, and the attention to build a customer base.

  12. Small business grants

    Grants are a great funding option for some businesses. They can be a lot of work to get, but the reward is free money.

  13. Pitching for business funding

    Seeking business funding is a major step but you needn’t be daunted. Here’s how to pitch your business.

  14. Tools and guides for your business

    Now that you’re in business, you want to stay there. Xero’s got resources and solutions to help.

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