June 22nd, 2015

A government grant is specifically defined as a financial award to an eligible business that does not have to be repaid, unlike a business loan. There are a number of different projects and activities that are either dismissed off the bat as ineligible for grant funding across the board, or at the very least programs that will allow grants to be spent on such activities are few and far between. Activities that fall under this category include the day-to-day operations expenses of a business, capital purchases that will not be earning money (purchasing real estate is often considered to be one of these), as well as bailing out a business from bankruptcy or severe debt.

What then are government grants used for in business?

General Uses for Government Grants

Funding from government grant programs can be used on a wide range of eligible activities. Even in specific grant programs, a business can position its intended project or activity towards any part of the overall goal of the program. This means that one program could cover activities that fall under any one of the examples listed below, provided that the project still accomplishes a general task that matches the overall objectives of the grant funding program.

Examples of business activities for which government grants can be used include:

• Hiring new personnel (often these programs intend the new employee to be a recent graduate)
• Purchasing additional equipment (ex: new brewery equipment for a craft brewery)
• Expanding production capacity
• Research and Development
• Saving Energy
• Product Development

Specific Uses for Government Grants

Of course, the ways in which government grants are used in business do vary depending on the specific program, and it is important to check on your government’s website for the specific programs in your area for which your business would be eligible. They will each have certain rules and regulations that limit the type of activities their funding can be used for, and it is important to be aware of this prior to applying.

One example of a program is the Investing in Business Innovation Initiative from FedDev Ontario. The eligible activities for this program must be aligned with the overall objectives of the initiative, and often include those related to the early-stages of business development, late-stage product development in order to diversify and grow their market, providing mentorship, as well as improving production capacity.¹ Please contact INAC Services for more information and help applying to programs.

¹FedDev Ontario. Frequently Asked Questions. http://www.feddevontario.gc.ca/eic/site/723.nsf/eng/00328.html#q1