11 Tips for Getting Free Government R&D Money!

by Peter Forint, BA, MBA

Too many small and medium businesses believe that government Research and Development money is only for big companies. Nothing could be further from the truth. Here's what you need to know to get your hands on some government R&D dough (and two bonus tips and important links for Ontario companies at the end):

1.  SRED:  "Scientific Research and Experimental Development" are grants from the federal government for money you've already spent (invested!).

2.  IRAP:  The National Research Council Canada "Industrial Research Assistance Program" provides direct technical assistance as well as funding for work you are planning to do.

3.  This is found money:  The government will pay 50-80% of your qualifying expenditures on a project-by-project basis. These are tax credits and grants adding real cash flow to your business.

4.  Lots to go around:  Through SREDs and IRAPs the federal government pays over $2 billion to 11,000 businesses every year.

5.  Any company that even ATTEMPTS its own design can qualify:  These programs promote R&D, and they understand that not every project succeeds. Hence, even failed projects get funded.

6.  Use consultants to do the legwork:  The process can be onerous, and there is nothing worse than wasting several days or weeks of your time only to be refused. I recommend that business owners hire professional consultants to do the applications on their behalf.

7.  There's no risk - really!  Most consultants in this field work on contingency, so if you don't qualify you don't pay for their services. Good consultants will assess your chances at qualifying in an introductory meeting, as they don't want to waste their time or yours.

8.  The vast majority of funding is for wages:  Certain equipment, such as testing equipment, may also qualify.

9.  It's not just for scientists and engineers:  Wages paid to any and all staff contributing a portion of their time to qualifying projects are eligible, including project managers, software programmers, and designers.

10.  Work with your accountant:  Some owners defer paying themselves a salary for tax and cash flow purposes. However, if you are performing qualifying work you need to show a salary to receive funding.

11.  Get started today!  Timeliness is important as you can only go back so far to claim SREDs, and IRAPs have finite funds available each year.

Bonus Tips for Ontario Companies

OIDMTC:  "Ontario Interactive Digital Media Tax Credit" supports the development of computer-based games, educational, and informational products, both offline and on-line. This could include websites, so long as the website is not used primarily to report the product or company. (For example, an insurance company website about preparing for business interruptions may qualify, but not if it was used to promote policies.)

Southern Ontario Development Program: This is aimed at companies looking to expand capacity, improve technology and equipment, improve productivity, innovation or commercialization of innovations.  I've been warned by an advisor with the Ontario Ministry of Economic Development and Trade that the application is not straightforward and some analysis must be done to support the funding request, similar to the SME-SMART and Yves Landry special project funds were in 2009-2009.  For details click on http://southernontario.gc.ca/eic/site/723.nsf/eng/00128.html

More Government Programs For Businesses:  Here is the best listing I've found for the different government programs and incentives.  Note that these are very specific to different industries and unfortunately most will not apply to your company.

http://www.investinontario.com/resources/government_programs.asp

Peter Forint is Regional Vice-President with Wardell Professional Development, a business coaching and consulting organization serving owner-managed and family run businesses. Email: peter.forint@wardell.biz, GTA: 416-290-5718, Toll Free: 877-290-5718. Learn more at http://www.peterforint.com.

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