Help business owners find funding

Information on tax credits, government funding or private financing is hard to come by. Advisors can spend weeks finding programs and reading fine print to get answers to basic questions like, “Is my client eligible?” And while it’s tough, applying for these programs is even more challenging. Yet clients want information quickly.

“Access to financing is top of mind for any business owner,” says John Reid, president, Canadian Advanced Technology Alliance. “Yet our members report there is little detailed information on Canada’s vast array of government funding programs, and it is too time-consuming to find it on literally thousands of government websites.”

Instead, advisors can access a bilingual, online database called TheFundingPortal.com. It tallies more than 4,000 distinct sources of Canadian grants, contributions, tax incentives and private financing in the form of angel, venture capital and private equity. The funds are available 24/7, and at publication time the Portal’s ticker indicates more than $24 billion is available to entrepreneurs and small and medium-sized businesses (SMEs).

A comparable service is provided by the federal government’s Canada Business Network, which allows businesses to fund opportunities from a database of 415 federal and provincial programs based on location, industry sector and funding objective.

Now that you know where to find funds, the difficult part starts.

Eighty percent of government funding applications are rejected for non-compliance. Business owners are often big-picture thinkers and don’t pore over the details. But public servants assess these applications against pretty rigid criteria.

There are several factors that give an application an edge.

• Write an application that addresses the funders’ objectives. For public funding, consider the government’s objectives in providing the programs, such as job creation and diversifying the local economy. If you’re pitching to private funders, explain the returns they’ll get.
• Focus on your client’s proven track record of success by citing external recognition and awards.
• Ensure your client meets all of the eligibility criteria. If a government program says it selects companies with five board members, three will not do. Each has its own eligibility factors. Identify all the options for your clients, as well as those that may be available after certain tweaks.

Many advisors tend to stick to the same three or four well-known programs—for example, the Industrial Research Assistance Program (IRAP), the Scientific Research and Experimental Development (SR&ED) tax credit, and various loan programs from the Business Development Bank of Canada.

In the 2012 Budget, the government announced it will increase long-term funding to IRAP. This program is administered by the National Research Council of Canada and is the most sought-after program on the Portal. It provides technology and financial assistance to support research and development, attracting 10,000 SMEs at all stages of development every year.

Almost 25,000 Canadian businesses apply each year and receive payment under the CRA’s $3.5 billion SR&ED tax credit. Under the program, Canadian-controlled private corporations can earn an investment tax credit of 35% on the first $3 million of qualified R&D expenditures, and 20% on additional expenditures. Eligible expenditures include salary, wages, materials, overhead expenses and contract payments.

“Everyone knows about SR&ED and IRAP,” says Deborah Weinstein, co-founder and partner at LaBarge Weinstein. “But there are thousands of other programs out there.”

For example, enterprise tax professionals often recommend the Apprenticeship Job Creation Tax Credit. The credit covers up to 10% of eligible apprentice salaries and wages payable to employers.

Clients hiring post-secondary graduates are in luck. There are programs that pay part of the salary of interns and new hires. For example, the Alberta Innovates Industry R&D Associates program provides an annual stipend of $55,000, and an annual research allowance of $7,000, to help companies recruit Master’s and PhD graduates for R&D projects.

And clients benefiting from SR&ED should know most provinces offer provincial tax incentives that can be used in combination with the federal program to provide bigger returns at year-end.

Teri Kirk is founder and CEO of The Funding Portal, an online database of grants and financing.