With funding crucial to business growth, many startups, SaaS companies, and tech consulting firms turn to venture capitalists for financial backing. However, suppose you’re a tech entrepreneur needing funds for research or hiring. In that case, you should know that business grants and tax incentives are a great way to get the financial help you need without giving up equity to an investor.
Government grants are non-repayable funding sources that can help tech companies cover the costs of research and development, hiring, training, and more.
Knowing which grants are available is the first step to taking advantage of the many funding programs that promote innovation in Canada. Here are seven valuable government grants you should know about as a tech entrepreneur.
Government Grants for Tech Research and Innovation
1. Industrial Research Assistance Program (IRAP)
Canada’s IRAP program has been providing financial support to small businesses and medium-sized companies pursuing technology-driven innovation for more than 70 years.
Two key offerings under the IRAP program include:
- Small Technology Innovation Projects. Offers grants of up to $50,000 to fund the R&D or commercialization of technology projects
- Mid-sized Technology Innovation Projects. Offers larger grants for larger projects involving internal R&D or the creation of original software
You’ll find a comprehensive list of this and similar innovation funding programs on the Government of Canada’s website.
2. Scientific Research & Experimental Development (SR&ED) Incentive
Rather than a grant, the SR&ED incentive is a tax credit that your organization may qualify for if it’s doing a “systematic investigation or search, through experiment or analysis, to advance science or technology.”
Should your tech company meet the eligibility criteria, you’ll be able to use the SR&ED investment tax credit to reduce your tax payable by deducting anywhere from 15-35% of eligible SR&ED expenditures from your income.
You can learn more about this incentive by accessing our on-demand webinar with SR&ED tax experts from KPMG.
3. Atlantic Innovation Fund (AIF)
Designed to help businesses and research institutions in Atlantic Canada compete at home and abroad through innovative technology, the AIF supports the development of ground-breaking products and services that lead to commercial success.
Your tech company could qualify for up to 75% of eligible project costs in research funding ($3 million maximum) if the technology you’re looking to develop shows a strong R&D component with commercialization potential and creates opportunities for Atlantic Canada’s economic development.
4. Strategic Innovation Fund (SIF)
The SIF program aims to spur innovation in Canada by contributing financially to large (over $10 million requested contribution), transformative, collaborative projects that:
- Advance Canada’s strategic technological advantage
- Promote clean growth through the use of clean technology
- Encourage long-term competitiveness in our global, knowledge-based economy
Contribution amounts vary on a case-by-case basis. If you qualify, your company could receive funding of up to 50% of eligible project costs through one of five streams of financial assistance.
Streams 1 through 3 are geared toward supporting:
- R&D and commercialization
- Growth and expansion of firms
- Attraction and retention of large-scale investments in Canada
Streams 4 & 5, meanwhile, support industrial R&D and technology demonstration through collaborations between academia, non-profit organizations, and the private sector.
As the most relevant tech options, yours must be a small, medium, or large for-profit corporation doing business in Canada to be eligible for Stream 1, 2, or 3 funding. Non-incorporated organizations like early-stage companies and startups are not eligible.
Need help getting your books ready for a grant application?
Get in touchGovernment Grants for Tech Hiring
5. Industrial Research Assistance Program (IRAP)
Another valuable IRAP funding subprogram for tech companies is the Youth Employment Program. This initiative provides funding to support the costs (up to $30,000 per graduate) of hiring up to 2 young (15-30 years of age) post-secondary graduates to work on your R&D, natural sciences and engineering research, or product or process development projects for a period of 6-12 months.
6. Innovator Skills Initiative (ISI) Grant
The Innovate BC ISI Grant offers BC-based tech companies up to $10,000 a year to hire a post-secondary student.
Benefits for your organization include the opportunity to:
- Take on top talent and train future employees
- Access project resources to help your company advance
- Showcase your industry’s challenges to future problem-solvers
Businesses and non-profits hiring for a tech role are also eligible to apply.
7. Digital Skills for Youth (DS4Y) Program
The Digital Skills for Youth (DS4Y) program is another hiring grant funded by the Government of Canada, and delivered by Innovate BC. The program offers companies in BC up to $25,500 to hire an intern (ages 15-30) in a technology-related position for a minimum of four months.
The program aims to match underemployed youth with small-medium sized businesses and not-for-profit organizations to provide working experience that would equip them with digital skills to successfully transition into a career in the digital economy.
8. BC Tech Co-op Grants Program
The BC Tech Co-op Grants program offers tech companies in BC up to $10,800 per year in funding to hire co-op students. This grant is also open to non-tech companies in BC looking to hire a co-op student in a tech role.
The program allows tech companies to utilize co-op students to fill gaps and also retain talent for future full-time roles. The program also provides small-medium sized businesses with the incentive to recruit and train co-op students, so that these students can acquire the digital skills and hands-on experience to integrate smoothly into the workforce.
Each employer is eligible for a maximum of four $2,700 grants each per program year (a total value of $10,800) to recruit and train one to four individual co-op students. The employer is responsible for paying the remaining salary of the student’s co-op term.
Government Grants for Tech Employee Training
9. Canada Job Grant
To help companies adapt to evolving market requirements, Canada Job Grant funding is available to employers in every province to help cover the costs of skills development training for new or existing employees.
By applying through programs like the BC Employer Training Grant, Canada-Alberta Job Grant, or Canada-Ontario Job Grant, for example, your BC, Alberta, or Ontario business could receive up to $10,000 per employee for eligible skills training expenses.
It’s important to know that, even when you’re eligible, applying for and managing government grants for tech companies can be complicated.
Many funders, for example, will want to see a grant budget or your current financial statements as part of the application process. So having an up-to-date set of books is essential for boosting your chances of having a grant approved.
Whether you need help putting together the financials for a grant application – or someone to properly manage and account for your grant spending – we have experience working with a wide range of tech companies at Enkel.
