Grants, loans and tax credits: Canada's three flavours of startup funding

A grant is capital awarded against a proposal — you compete for it, report on it, and keep it if you meet the terms. Grants rarely cover everything; they fund specific projects, hires or activities. Their advantage is obvious: non-dilutive and non-repayable. Their cost is effort: applications are competitive, milestone-heavy and slow.

Loans are the workhorse of small-business financing. They come from banks, credit unions and mandate lenders like BDC. A loan is appropriate when cash flow can service the repayment — the financing decision is whether the funded activity returns more than the cost of the loan.

Tax credits refund a share of eligible expenses after the fact. Canada's flagship is SR&ED: eligible R&D spending by a Canadian-controlled private corporation earns a refundable federal credit of up to 35% on the first tranche of qualifying expenditures, plus provincial credits that stack on top. Credits are not funding you apply for up front — they are claimed on the return for work already performed, which is why planning eligibility matters more than filing speed.

The three are not mutually exclusive — mature claimants combine them. A common stack for an R&D-heavy startup: a grant covers a specific project, SR&ED credits refund a share of the salaries, and a loan bridges the cash gap between spending and the refund. Financing expenses themselves are generally deductible against business income, so the cost of the loan partially offsets itself.

The directory lists funding offerings with amounts, deadlines and the stages they serve. Filter to your stage and program area to build a funding stack of your own.