Business success is a moving target. For a company to achieve its long-term goals, it must keep up with the changing times through innovations. This is especially true for developed countries like Canada. Canadian companies must be responsive to evolving technologies and the subsequent changes in consumer behavior.
At the heart of every innovation is research and development or R&D. R&D Canada gives businesses an edge against local and global competition. It also helps small companies compete against their more established counterparts. The key is for them to stretch and maximize their R&D budget.
It is for this reason that the Government of Canada provides many forms of funding for small businesses. Access to any of these government programs is an effective equalizer. With these grants, R&D activities are not just reserved for large companies with significant research budgets. Small businesses can also find ways to challenge products that currently have a firm grip on the market.
The government of Canada provides funding in two ways: through grants and tax credits. An R&D credit is a deduction from taxes owed, an example of which are allowances for R&D capital expenditures. A grant is a sum of money that is given conditionally but does not require repayment. Either of these can be used to launch essential R&D initiatives that could lead to the creation of new products, improvement of existing ones, or the use of new technology to increase productivity.
To navigate the complex landscape of government funds, you should talk to funding experts like EVAMAX. EVAMAX can identify which grant suits your needs and help you submit a successful claim. You can discuss with them any of the following R&D funding programs offered by the Government of Canada:
R&D Credit from SRED Tax Incentive Program
No discussion about government grants can begin without mentioning the Scientific Research and Experimental Development or SR&ED program. It is a federal tax incentive program offered through the Canada Revenue Agency or CRA. SRED is arguably the most successful and generous funding source in Canada. It helps over 20,000 businesses every year in their pursuit of research and development projects.
In 2015 alone, the program was able to offer over $3 billion worth of funding. Eligible businesses were able to access SRED funding in three ways:
- An R&D credit for tax owed
- A deduction from the income tax
- A refund of eligible costs if no research and development tax is owed
Activities Funded by SR&ED Refunds
The Scientific Research and Experimental Development grant is a backdated refundable tax credit given to eligible businesses four to 12 months after an approved project is completed. It can be used to cover a wide variety of related costs, from wage subsidy for R&D experts to certain overhead costs:
- Salaries and wages of employees working directly on an approved project
- Materials consumed or transformed during approved research and experimental development activity
- Costs from approved SRED work, whether in-house, through a third party, or with the help of schools and other entities.
- Third-party payments for outsourced SRED work, as defined by program policy
Who Can Apply?
SRED is open to Canadian controlled private corporations or CCPCs. Eligible CCPCs could get up to 35% worth of R&D credit to cover eligible project costs. The funding cap limit is set at $3 million.
R&D Canada through IRAP
Aside from the SRED tax credit, another government funding program that stands out is the Industrial Research Assistance Program or IRAP. IRAP is delivered by the National Research Council or NRC and is designed to help innovative businesses engage in research and development R&D projects. Its ultimate goal is to stimulate economic growth and create jobs throughout Canada by leveraging innovation.
Activities Funded by IRAP
IRAP supports various activities designed to remove the barriers against internal innovation. This includes the implementation of new software, projects to help boost productivity, and design to marketing of new products.
Eligible businesses could get funding of up to $50,000. It can be used to pay for 80% of the salaries and 50% of contractor costs of approved projects. The funding amount is generally capped at $150,000.
Who Can Apply?
For businesses to qualify for the IRAP, they must be incorporated in Canada for the past two years. In addition, the company must have no more than 500 full-time equivalent employees.
Support from the SIF
The Strategic Innovation Fund or SIF is next in the long line of successful R&D funding programs launched by the Government of Canada. It is designed to support businesses in their quest for technology development projects through R&D Canada.
Activities Funded by SIF
Eligible businesses can access SIF in two ways: through the Business Innovation and the Growth streams. SIF supports large innovative projects with over $10 million worth of expenditures. It offers financial support that can be used to cover up to 50% of qualified expenditures. It can come as a combination of repayable and non-repayable contributions.
Projects that target technology development acceleration have a chance to qualify for one stream of the program. Efforts to accelerate the introduction of innovative products into the market are supported by the other.
Who Can Apply?
SIF is open to businesses across all sectors throughout Canada, especially those engaged in projects that promote technological development and product commercialization through R&D. If the project is an integral part of a company’s long-term business plan, there is a higher chance of qualifying.
Specific eligibility criteria depend heavily on the type of business and what industry it is in. To find out if SIF is a good fit for your business, you can talk to fund finding experts like EVAMAX.
Collaboration Through the CIIP
The Canada International Innovation Program or CIIP is a government program that encourages collaborations with international partners. Countries included in the program are Brazil, China, India, Israel, and South Korea. For projects to qualify under the CIIP, they must have the potential to achieve commercial success.
Activities Funded by CIIP
CIIP supports activities such as technology adaptation, validation, and co-development. Qualified projects could receive funding of up to 50% of relevant costs, up to a maximum of $600,000.
Networking events that could lead to collaborative projects involving R&D Canada and foreign partners are also eligible under the program. CIIP can cover a maximum of 50% of eligible expenditures, up to a maximum of $15,000.
Who Can Apply?
Small and medium-sized Canadian for-profit companies seeking to improve products, services, and processes are welcome to apply. They must be willing to collaborate with foreign partners. In addition, the project involved must be commercially viable.
Non-Repayable Funding from ISC
Innovative Solutions Canada or ISC is a proposal-based initiative launched by the Government of Canada. It is designed to help business innovators bring new ideas to the market. A strong focus is given to projects that provide solutions to departmental challenges within the federal government.
Activities Funded by ISC
ISC supports technology research, product development, and its ensuing commercialization. Eligible businesses with an approved proposal could get $150,000 worth of funds for Phase 1, which is proof of concept. Concepts that meet the criteria are invited to Phase 2 (product development), where they will be awarded up to $1 million. If the prototype from Phase 2 meets the needs of the government, they will purchase it from the business, providing a pathway to commercialization.
Who Can Apply?
ISC is open to start-ups and SMEs from all industries and across Canada. They must be incorporated in the country, whether federally or provincially. Applying companies must have less than 500 full-time employees, and at least half of them must be based in Canada.
Final Thoughts on R&D Canada
The Government of Canada has many innovation funding programs that can help businesses meet various business goals. This includes doing research activities and product development projects that can bring innovative ideas to market.
If your company lacks technical and technological capabilities, you can still pursue innovation. Using funds from government grants, you can hire R&D experts, purchase the necessary equipment, or outsource other activities.
The grants discussed above are just some of the many being offered in Canada. All you need to do is find the one best suited for your needs. If you want to know more about potential funding options available to you, EVAMAX can help.
EVAMAX has served over 900 clients, helping them gain access to over $115 million in funding. Call today for an obligation-free consultation and find out how you can get free money for your business.