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Canada Digital Adoption Program Launched to Assist Small and Medium-Sized Businesses

Canada Digital Adoption Program Launched to Assist Small and Medium-Sized Businesses

By:

Posted June 20, 2022

The Federal Government of Canada recently launched the Canada Digital Adoption Program (“CDAP”) run by Innovation, Science and Economic Development Canada (“ISED”). It is a 4-year program with $1.4 billion in grants and advisory services and up to $2.6 billion in loans from the Business Development Bank of Canada (“BDC”). CDAP aims to help small and medium-sized businesses accelerate their digital transformation in order to improve competitiveness and enable them to grow and succeed. The program consists of the Grow Your Business Online Grant (the “GYBO Grant”) and the Boost Your Business Technology Grant (the “BYBT Grant”), which are described below.

  1. Grow Your Business Online Grant for Small Businesses

Under the GYBO Grant, eligible small businesses can apply and potentially receive a grant, through local and regional service providers, of up to $2,400 to assist with eligible costs of adopting digital technologies.

Which Costs are Eligible?

Examples of eligible costs include:

  • Costs related to the implementation of a digital e-commerce plan, such as online reservation or booking tools, online ordering systems, and electronic payments.
  • Costs related to website search optimization.
  • Costs related to the installation of an e-commerce platform, including subscription fees.
  • Costs of back-office solutions to support an e-commerce strategy.
  • Costs of social media advertising.
  • Costs related to the creation of customer databases.

Costs of connectivity and costs related to the shipping of goods bought through the e-commerce platform are ineligible for the purposes of the GYBO Grant.

Is My Small Business Eligible to Receive the Grant?

In order to be eligible for the GYBO Grant, a small business must meet all of the following criteria:

  • Be a for-profit business that is registered or incorporated.
  • Be a consumer-facing business that can be accessed by consumers or that provides in-person services to consumers.
  • Have at least one employee.
  • Commit to maintaining digital adoption strategy for 6 months after participation in the program.
  • Consent to participating in follow-up surveys, sharing information with the Government of Canada (ISED and Statistics Canada), and having the name of the business published as a recipient of funding.

Corporate chains, franchises, registered charities, real estate brokerages, and representatives of multi-level marketing companies are not eligible for the GYBO Grant.

  1. Boost Your Business Technology Grant for Small and Medium-Sized Businesses

The BYBT Grant provides support to small and medium-sized businesses, which wish to adopt digital technologies, by offering advisory grants, interest-free loans, and funded work placements.

Advisory Grant

An eligible business may apply and receive a grant to pay for the services of a digital adoption advisor who will assist the business in developing a digital adoption plan tailored to its needs. The BYBT Grant will cover up to 90% of the eligible cost of retaining the digital advisor’s services, up to a maximum of $15,000 (inclusive of applicable taxes).

A small or medium-sized business must meet all of the following criteria in order to be eligible:

  • Be incorporated federally or provincially or be a Canadian-resident sole proprietor.
  • Be a for-profit, privately owned business.
  • Have 1 to 499 full-time equivalent employees.
  • Have at least $500,000 of annual revenues in one of the previous 3 tax years.

Interest-Free Loan

Once a digital adoption plan has been developed (either as part of CDAP or under another recognized digital adoption program), eligible businesses will be eligible, subject to BDC’s credit requirements, for an interest-free loan from BDC that would support the implementation of their plan.

A business with an annual revenue of at least $500,000 and below $5,000,000 can request a loan in an amount between $25,000 and $50,000. A business with an annual revenue of at least $5,000,000 can request a loan between $25,000 and $100,000. The loans have a 5-year term with a 12-month capital postponement.

An eligible business has one year from the completion of the digital adoption plan to submit a loan request to BDC for this interest-free loan.

Funded Work Placement

In addition, eligible businesses may receive a wage subsidy of up to $7,300 to hire post-secondary students and recent graduates to help them with their digital adoption.

To learn more about the Canada Digital Adoption Program and the available grants under this program, please visit canada.ca/digital-adoption.

This blog post was written by Marina Abrosimov, a member of the Business Law team.  Marina can be reached at 613-369-0363 or at marina.abrosimov@mannlawyers.com.

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