As a small business owner in Canada, you may be considering government funding options for your business.
Each program type has its own unique advantages, as a Canadian small business owner it is important to understand which programs your business may be eligible for before you make your decision.
Government Grants vs Government Loans
The two most popular program types include the various government grants and the government loan programs that are available.
These programs are the most popular as they are 1) the most desired and; 2) the most accessible.
When you need capital to start or expand your small business, government grants may not always be the best option when you are in need of funds.
It is important to consider all of your options when seeking funding for your business.
Depending on your situation, government grants and government loans each have their own unique advantages and disadvantages to small business owners.
The government grant options available become the most desirable programs as they are often considered “free money” for small businesses.
In other words, this money is understood to be given by the government without the need to repay.
While this may be true in some cases, there are multiple government grant program types available:
- Non repayable government grants
- Partial contribution government grants
- One time and renewable government grants
In certain circumstances, conditionally repayable government grants may be an option as well.
Speak to a CanadaStartups.org funding expert to get a better understanding of each type of government funding program, how it works and what may be available to your specific business.
The Advantages of Government Grants
Any opportunity to get free money from the government seems like an advantage, doesn’t it? Especially if this money can help fund the necessary startup or expansion costs of your business.
No better advantage than this!
This grant money would not be repayable as long as it is used towards funding specific needs for your business that the government has approved.
The Disadvantages of Government Grants
The main disadvantage of government grants would be the application process.
Government grants are highly competitive. This means that thousands of businesses across Canada will apply for the same program – to get the free money that you and so many others are searching.
As the programs become increasingly competitive, the waitlist for approval becomes longer and longer. If you are in urgent need of funds to get by, this extended process may put your business at risk.
Another disadvantage is that not all government grant programs fund all business activities. Since most government grants are designed to help business owners with specific activities such as hiring employees, training staff or going green, not everyone can apply and be eligible.
The second most popular program type is government loans.
There are different types of Government Loans which include:
- No interest government loans
- Low interest government loans
- Conditionally repayable government loans
- Government guaranteed government loans
These loan types all have their unique advantages and disadvantages as well. To learn more about the different types, get help from the CanadaStartups funding experts.
The Advantages of Government Loans
As one of the most popular funding program types available, government loans are often the easiest to apply for, to get approved and to obtain.
Much like a bank loan, government loans have an easier approval rate as the government doesn’t see as much risk in providing you the funds. However, unlike bank loans, government loans often provide better rates, repayment options and can be negotiated more easily.
Depending on the type of government loan your business applies for, you may be able to benefit from a wide variety of advantages such as no payment for certain months, or even years, low-to-no interest and more.
The Disadvantages of Government Loans
The main disadvantage of government loans is that you are taking on the risk – just like a bank loan, you are personally responsible for any funds borrowed.
In other words, if the business doesn’t do well, you are still on the hook for the money borrowed.
If you are a small business in need of funds to get by or fund the necessary startup or expansion costs, the decision between choosing a government grant or a government loan might be made for you.
This is where eligibility comes into play. In most cases, as a business owner you won’t have much choice between one or the other as most businesses are either eligible or ineligible for a government grant or loan.
Unless you are eligible for the specific funding activities which government grants fund, your only option will be government loans.
That being said, government grants are always the best options if possible for your business.
Government loans are easier to obtain, faster in terms of approval and less competitive.
If you need help deciding if a government grant or a government loan is right for your small business, it is important to speak with an expert. Experts at Canada Startups are here to help and ensure you have the most up-to-date information so that you can make the best decision for your business.
SEARCHES RELATED TO CANADIAN GOVERNMENT FUNDING
I WANT START A BUSINESS IN...
IS THERE HELP IN MY INDUSTRY?
- Expansion Capital
- Funding For Equipment
- Business Acquisition Funding
- Consulting Services
- Hiring & Training Staff
- Management Support Services
- Professional and IT Services
- Transportation and Warehousing
- Accommodation and Food Services
- Culture and Recreation
- Finance and Real Estate
- Forestry, Hunting and Fishing
- Health and Social Assistance