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Businesses must embrace an innovation mindset to continue growing and advancing. Business advancement can be achieved through research and development (R&D). It is possible for Canadian businesses to gain competitive advantages over their domestic and international competitors when they adapt and adopt new innovative strategies. Small-to-medium-sized businesses (SMEs) can also benefit from R&D activities, which are not exclusive to research-oriented companies or large businesses with large budgets.

Through grants, loans, and tax credits, government funding programs can assist Canadian businesses in their innovation goals. Check out this blog to discover what federal programs you can use to fund your business’ research and development.

You can apply for funding through five federal government research and development programs. If you read this article in the future, a listed funding program may not be available. View the Research and Development Funding Directory to find all programs that are currently accepting applications.

Canadian Grants and Loans for Research and Development 

Innovative Solutions Canada (ISC) Challenges

Government grants and procurement contracts are provided by Innovative Solutions Canada (ISC) to promote technology research, development, and commercialization. A Challenge Stream and a Testing Stream are designed to assist SMEs and start-ups in testing and developing technology to meet global market demands. 

• Funding Amount: SMEs can access up to $150k for proof-of-concept projects, and up to $2M for prototype development, and may also be awarded a government contract.

• Applicant Eligibility: For-profit Canadian incorporations with <500 employees are eligible to apply. 50%+ FTEs and senior executives must be in Canada

National Research Council of Canada’s Industrial Research Assistance Program (NRC IRAP)

Canadian innovators can benefit from the Industrial Research Assistance Program (NRC IRAP) provided by the National Research Council of Canada. The NRC IRAP provides research funding primarily to businesses that are developing and implementing processes improvements. However, larger-scale technology adoption projects that result in new capabilities may also qualify. 

• Funding Amount: Eligible applicants can access up to 60%-80% of internal technical labour and subcontractor expenses.

• Applicant Eligibility: Incorporated and financially stable businesses with 1-500 employees are eligible to apply.

Mitacs Accelerate Program

SMEs and applicants work together through Mitacs Accelerate funding program. Students who are eligible for internships have a Masters, PhD, or postdoctoral fellowship and use their expertise to develop tools, models, technologies, and solutions for small businesses.

• Funding Amount: The program provides support up to $15,000 for each four- to six-month internship with a financial contribution of $7,500 from the partnering organization. The cluster stream supplies additional funding if the business offers 6+ internship periods to 3+ interns. Funding includes intern stipend and research costs.

• Applicant Eligibility: Incorporated, for-profit businesses, and select non-profits across Canada. All industries and sectors are supported; preference is given to research and development projects in innovation.

Strategic Innovation Fund (SIF)

Designed specifically for Canada’s industry and technology sectors, the Strategic Innovation Fund (SIF) provides government funding for innovation projects. To promote investment in activities that drive sustained productivity and economic benefits, it offers financial contributions (both reimbursable grants and non-repayable loans) valued at up to 50% of project costs.

• Funding Amount: The SIF program focuses on projects requesting at least $10 million in contributions. This means a minimum project size of $20 million.

• Applicant Eligibility: Although the SIF program is open to all businesses, potential applicants should keep in mind that this is an extremely competitive program. While your company may be eligible for funding, successful applicants must demonstrate high growth potential and the ability to drive innovation.

Scientific Research and Experimental Development (SR&ED)

Tax credits for research and development projects are available through the Scientific Research and Experimental Development (SR&ED) program. Tax incentives worth over $3 billion are claimed by over 20,000 SR&ED applicants every year.

• Funding Amount: Tax credits can cover up to 69% of labour and overhead costs, 36% of contractor costs, and 45% of material costs. All expenses must be related to the activities required to resolve a technological uncertainty, obstacle, or challenge.

• Applicant Eligibility: The federal SR&ED program is offered Canada-wide combined with provincial funding. SR&ED is one of the largest tax incentive programs and is available to a wide range of Canadian businesses including individuals, trusts, membership of a partnership, Canadian-Controlled Private Corporations (CCPC), and other corporations.

Get to Know Canadian Funding Programs   

These research and development funding programs are intended for SMEs.  Even if your business doesn’t meet the requirements of a particular program, you can still take advantage of free Canadian Startup Business Resources.   

If your business wants to start accessing funding for R&D, connect with our Consulting Partner, Mentor Works, for more information on streamlining the funding and grant application process.