Many small to medium-sized businesses (SMBs) in Canada struggle to initiate new projects because they lack access to adequate capital. Luckily, numerous funding opportunities are available to help businesses finance groundbreaking initiatives. One such program is the National Research Council of Canada Industrial Research Assistance Program or NRC IRAP. This program helps SMBs expand their capabilities and bring innovative ideas to market.
IRAP is dedicated to helping smaller Canadian businesses drive innovation and manufacture pioneering products and services. This government program accomplishes this goal by offering financial assistance, advisory services, and connections to various partners. Following this model for more than 75 years, IRAP has helped several enterprises expand their offerings and promote wealth creation across the country.
Besides funding, one of the most valuable advantages of having IRAP support is the networking opportunities it provides. The program grants businesses access to over 250 Canadian industrial technology advisors (ITAs) who have a wealth of experience in research, development, and SMB management. IRAP also connects organizations with regional, national, and international partners that span multiple industries and institutions.
The combined knowledge from partners provide the following:
- Business, management, and technical guidance
- Financial advice
- Marketing insights
- Legal knowledge
- Strategic intelligence
- Referrals and connections to other programs and resources
- Research and development advice
- Community-specific prospects
- Troubleshooting support
Businesses eligible for IRAP funding must be incorporated and small or medium in size. The Government considers an enterprise with no more than 500 full-time equivalent employees to be an SMB. Your organization must also focus on increasing profits by developing and selling a technology-based product, service, or process in Canada.
If your company meets these basic requirements, you can contact IRAP to find out what assistance is available for your business. When you communicate with a program representative, ensure you have a project pitch, a copy of your business financial records, and resumes for each individual on your management and technical teams. These documents help IRAP representatives during the initial stage of determining your eligibility.
The IRAP Proposal and Application Process
Once IRAP verifies your eligibility, it will direct you to an ITA for further review. ITAs typically conduct in-person meetings with you to better understand how your business operates. However, due to the COVID-19 pandemic, these meetings may be virtual. The primary purpose of these meetings is to help the ITA spot liabilities and offer possible solutions to rectify them.
Some of the aspects they may discuss include:
- The target customer base for the product, service, or process
- Economic capacity to cover additional costs
- Leadership abilities of the current management team
- Long-term project planning
- Problems the product, service, or process will solve
- Product or service development and marketing strategies
- Technological aptitude and potential risks
The ITA may request that you draft an IRAP proposal following their evaluation of your business. After you submit your IRAP proposal, representatives will take up to three months to determine if they will extend financial assistance.
During this time, they assess the following:
- The technical features of the project
- The business, financial, and management capability of your company
- The commercialization plan and market opportunity
- The likelihood of success
- The expected benefits to Canada
- The overall impact on your business
IRAP Funding vs. SR&ED Funding
Many people conflate IRAP and the Scientific Research and Development (SR&ED) tax incentive programs because they are both government-funded and support innovative projects. While businesses may take advantage of both programs, they have several important distinctions. When submitting an IRAP application, it is necessary to know the differences between these two initiatives to make the most of your funding opportunities.
One important distinction is that IRAP financial assistance comes before a project begins, while SR&ED tax refunds come after. The SR&ED program provides an annual tax refund. It is only issued after submitting an SR&ED claim on Form T661 at the end of your fiscal year. Additionally, SR&ED tax credits may cover overhead expenses, whereas IRAP funding will not, and any IRAP funding received must be deducted from your SR&ED claim.
If you plan on utilizing both programs but need faster access to capital throughout the year, an SR&ED refund financing company like Easly can help.
Finance Innovation with Easly Today
At Easly, we help forward-thinking Canadian businesses by advancing their accrued SR&ED tax credits before the Government issues their refund. These companies can access non-dilutive and on-demand funding through our Capital-as-a-Service platform.
To learn more about the SR&ED tax incentive program and our services, schedule an introductory call with us today.