Small business owners have it tough. A majority of the start-up and maintenance costs must be covered by them in order to operate as a proper business. However, if you do not currently have a high-income job or access to unlimited funds, you’ll need to find a way to financially support your business. This is where government funding comes in.
Whether you realize it or not, the government is involved in businesses and they have a special interest in ensuring businesses are profitable. A profitable business helps the economy and creates employment. To encourage this, the government is heavily involved in businesses, awarding millions of dollars to small, medium, and large enterprises.
There are two types of funding: Government Grants, and Government Loans.
Although loans are an option, receiving government grants is often more desirable. There is no shame in using the help of government funding to finance your dreams.
Advantages of Government Grants
Governments grants are a great option if:
- You don’t want to give up a stake or share in your company
- You don’t want to go into debt or accumulate new debt
- You don’t need to pay it back (unless you receive more money than you are eligible for)
Disadvantages of Government Grants
The benefits tend to outweigh the downsides, but a few things to consider are:
- Grants are considered taxable income
- Grants must be used for specific tasks
- Grants are short-term solutions, not constant financing
- Grants are not easy to secure
- Many grants require a lot of research and specific requirements
Advantages of Government Loans
There are different types of government loans from no-interest to low-interest and conditional repayment. It is typically easier to secure a government loan over a government grant, which makes government loans a popular funding program. These loans typically offer:
- Better rates
- Better repayment options
- Easier negotiations
Disadvantages of Government Grants
The main disadvantage of a government loan is it is borrowed money and you’ll need to pay it back.
What to Do Before Access Government Funding
Before you consider looking for funding, there is one important step you won’t want to miss: develop a business plan. Although a business plan should be completed before starting a business, not everyone does them. A plan is critical to the success of your business and obtaining government funding.
The degree of information you’ll need for each funding application will vary, but a business plan should clearly outline the following:
- Who you are
- What you do
- The problem your business solves and how it solves it
- How much money the business needs to run
- How much money you will need to live
- How much money you will charge
- Your specific marketing plans
- How much money do you need
- What you would do with funding
- What elements do you need to make your business operate smoothly
Government programs reach hundreds and thousands of applications. You need to ensure your application is organized and aim to make it stand out among the rest. Once, your money is sorted and the business plan, it is time to look into government funding.
How to Access Government Funding
1) Research: Find what government funding is available
Researching is a time-consuming process. A good starting place to look for Canadian government funding programs is canada.ca. You can sort the programs by field, amount, and other pre-set qualifications and criteria.
2) Assess: Determine your eligibility for government funding
All grants have criteria you must meet in order to qualify. Your business must be eligible in order to apply.
3) Submit: Send the proposal or application
This step sounds like the simplest but with thousands of applications, it is incredibly difficult to secure funding. This is why some businesses hire experienced grant writers who know exactly what to write to increase your chances of being chosen.
Do you know how loans and grants affect your taxes?