Maximizing Government Funding For Growth
Written by:
James Ro, Vice President of NorthBridge Consultants
Financing for innovation, growth or expansion remains a large obstacle for many small and medium-sized enterprises (SMEs) in Canada. Federal and provincial funding programs amount to over $20 billion annually and demonstrate that the government recognizes that these initiatives encourage Canadian businesses to take on business risks and continually innovate, pursue new markets, grow the economy and create jobs.
Approximately 20% of all Canadian business owners indicate that obtaining financing is an obstacle to growth, therefore, funding options such as grants, loans and tax credits should be considered as a part of the overall financing solution for investing in product development or process improvements, working capital, expanding facilities or purchasing new equipment.
Receiving government funding is one of the best ways to attain financing for innovation and business expansion and provides a significant competitive advantage in the domestic and international marketplace for companies in all industries and of all sizes; however, when a company makes a decision to invest in innovation or growth, there needs to be a certain level of confidence that the initial investment will be recovered in a timely fashion. Government funding programs assist companies in realizing a positive “return on investment” and significantly add to cash flow, which drives investment. Ultimately, companies that that do not take advantage of various programs are at a significant competitive disadvantage.
The problem is, there are literally hundreds of available programs in various forms including tax credits, grants and loans which change periodically, have limited funding and specific application periods, resulting in significant hurdles to identifying existing programs and complying with the application process. In fact, studies have shown that burdensome and time consuming application processes as well as a lack of awareness about existing programs are the main reasons that companies do not participate in government funding programs.
Most companies do not have the time and resources to stay current with the changing funding system or deal with the unpredictability and inconsistencies of the application processes. These facts can help justify using experienced consultants as they often play a role in helping companies stay current with the right programs for their business objectives. If third-party preparers can improve the awareness and program application compliance, especially in today’s changing economic landscape, then accessing financing from these sources can give Canadian companies the edge they need to take their business to the next level.
James Ro
Vice President of NorthBridge Consultants
James spent the majority of his career providing advice to small and medium-sized businesses with respect to raising capital (senior debt, subordinated debt and private equity), mergers, acquisitions and divestitures and debt restructurings.
Over the last two years, he has become experienced in advising companies on government public funding programs in order to finance projects for innovation and growth. He is a firm believer that government funding should be considered as a part of the overall financing solution (in addition to debt and equity). James has held advisory positions at both Bay Street investment banking firms and one of the Big Four accounting firms.