While Ottawa has announced a stream of relief programs since the fight against COVID-19 began, none of those programs seemed to specifically provide the kind of much-needed help Canadian start-ups need. In fact, many start-ups fell into the gaps of these programs because of the requirements on payroll range and revenue reduction. The winds seem to be changing in the right direction for start-ups however, as on Friday, April 17, 2020, the government unveiled $1.2 billion in pandemic funding for start-ups and small businesses (SMBs).
The $1.2 billion support includes a $250 million boost to the Industrial Research Assistance Program (IRAP), run by the National Research Council of Canada in order to help small and medium size businesses commercialize their products, and $962 million in funding to both the Community Futures Network of Canada and regional development agencies to help SMBs.
This is great news for startups, as many of them are not typically eligible for the other government relief programs like the Canada Emergency Wage Subsidy program (which requires companies to prove a 30% drop in revenue), and the Canada Emergency Business Account forgivable loan program (which limits payroll expenses to $1.5 million, an often unrealistic limit for VC-backed startups).
This new relief package announced on Friday, especially the IRAP funding, is no doubt a welcome does of sunshine for many start-ups that are struggling during these rainy days. This support program is still in the early design stage, and more details are expected to be announced soon. According to Innovation Minister Navdeep Bains, the IRAP funding is available to both existing IRAP-funded companies and new companies, and the support funds would flow to companies in a matter of days or weeks.
The Fasken Emerging Tech team will be on the lookout for the details about the IRAP relief program as well as other programs that are aiming to help startups. Please do not hesitate to contact us if you are contemplating financing for your startups or wish to explore your eligibility for different government COVID-19 relief programs.