Top 5 Reasons Your Business Grant Applications Are Denied

As a Canadian government grants specialist, I have written and submitted hundreds of various government business grant applications for companies from a whole range of business verticals. These grants have covered activities ranging from export marketing, research and development, hiring, training, and capital expenditure costs. When you work through such a large sample base of applications over the years, you develop an understanding of patterns in the conduct of program judges examining applications, and what applicants can do to increase their chances of approval. In addition, you get to see the pitfalls applicants fall into and the key missteps they take in their applications. What follows is what I consider to be the top five reasons why applicants get their applications denied and what they can do to avoid them.

Not Enough Benefits to Canada

One of the main reasons why applications are denied is the failure to emphasize the benefits they offer to Canada. Applicants tend to provide long detailed summaries of the company’s goals, business plans, and history, but fail to articulate how the project benefits the local economy. With any grant program, the government is looking to fund projects that have the biggest positive impact on the local economy. Applicants need to mention specifically how many full-time jobs the project will create, how many jobs it saves, and the project’s potential to generate revenue for the economy.

The inclusion of numerical forecast metrics helps the application stand out, as the program judges can use these numbers as determining factors for funding approval, particularly for highly competitive programs.

Selecting the Wrong Grant Program

There are numerous funding grants available at any given time. One of the most difficult parts about applying to government grant programs is scoping and targeting the right program for your project. Submitting grants is a time-consuming task with no guarantee for approval. Therefore, when you choose a funding program, you not only need to match the company eligibility and project requirements but also to be able to maximize funding compared to other available grants so that you increase your chances of approval.

For example, if you plan to attend a trade show in the U.S, where you have had no previous sales, there are at least two programs you can apply for that cover 50% of your tradeshow costs. On an initial glance, the Export Market Access program and the CanExport cover the same funding for tradeshows. However, by spending the time to review the guidelines, one discovers that the CanExport covers more than just tradeshow costs and, therefore, is better suited for a company that plans to attend multiple tradeshows and business trips within the year for a new market. Without proper research, many applicants end up applying to the wrong grant with subsequently much lower chances of obtaining approval. It is necessary for applicants to read the full guidelines for each program and, if possible, talk with a program representative before starting an application.

Budget Amount Requested Is Too High With A Too Low R.O.I.

There are applicants who try unnecessarily to maximize the full amount of the grant, even if it does not accurately reflect their cost forecast. For example, if a funding program covers 50% up to a maximum of $250k for labour costs, applicants tend to mark up the budget to $500k, so they can receive the full amount. If you are applying for grant, you will need to demonstrate how the amount requested will ideally return double or triple the government investment in 1 year or 2 after the approval.

Remember that the government is investing in your project to maximize the benefits to the local economy, so if you are requesting $250k in grant funding but only projected to bring in $50k in new sales and two full-time jobs, your application will have a hard time getting approved. However, if you ask for $25k in funding, your application will look a lot more favorable.

I would like to emphasize that if an applicant company has a project that costs $500k, it must demonstrate it has the financial stability to handle the project. Companies must show they have the working capital to handle their portion of the budget. The last thing the government wants to do is invest in a company and have it fold the following year, along with the grant money.

Poor Long-Term Planning

With almost 95% of the grants, applicants need to apply at least 2 to 3 months before the activity occurs to maximize your chances of approval; no retroactive expenses can be applied. Many applicants, unfortunately, fail to time their applications with grant deadlines.

For example, to apply for the Canada Job Training grant, you need to have been fully approved before you start the training. With some of the larger training programs, processing applications can take up to two months, not to mention the time needed to complete the application.

Hypothetically, if the grant is approved, but the training has already started during that wait time, the application would automatically be disqualified and the company would not be able to get any funding.

It is crucial to be aware of all grants you want to apply for within the year and align them with your upcoming projects. Every grant program has a different deadline, so it is important to map out a timeline of when you need to submit certain grants. Many successful companies have a process in place for monthly or quarterly meetings, during which they align projects with available funding grants.

Bad Timing and Location

Timing and location are two factors that are usually outside an applicant’s control. However, they continue to play a big role in the rejection of many applications. Many grant programs are renewed every year, which means their budget is reset with new funding. For example, many federal government grants are renewed in April, a renewal that coincides with the Canadian government fiscal year end. This means applications that were rejected with the same merit are approved in April, because of a larger funding pool.

As the year winds down, the budget pools get smaller and the competition tougher. However, this applies mainly to grants that have an on-going deadline instead of specific intake periods. If you’re looking to apply for a grant with an on-going deadline, it would be best to plan for major projects to start in April. Additionally, companies located in more rural locations tend to have a better chance of approval as there is a bigger pool of funding in their geographic location.

For example, in Toronto, the competition for grant funding is quite high, but in Sudbury, one’s chances are much higher. Options are limited if entire operations of a company are in a major city, but if that same company has branches outside the city, it might be worthwhile to apply from that office instead. This is something important to keep in mind for those looking for an ideal location to start up a business.

If applicants take into consideration some of the above-mentioned factors, they can greatly improve their success rate and have a much more effective approach in applying to government grant programs.

Eddie Bissoon is a Grants Application Manager at RDP Associates. He can be contacted at RDPGrantsTeam@rdpassociates.com

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