Why Did Loblaws Get $12 Million in Government Grant Funding?
In April, the Canadian government announced that they awarded Loblaws $12 million from the Low Carbon Economy Fund to install lower-emission refrigeration systems in 370 stores. Loblaws, Canada’s largest food retailer, said their new refrigeration systems will reduce their overall carbon footprint by 23%.
Unsurprisingly, this announcement sparked outrage among the public who were questioning why their tax dollars were going to a hugely profitable company. Much of the media coverage focused on the public’s anger and there hasn’t been much deeper discussion on why smaller organizations didn’t receive as big a grant when they were all eligible to apply for the two billion dollar Low Carbon Economy Fund.
We wanted to add our perspective on why a big company like Loblaws received the grant, the goals of the funding program and how smaller businesses can still get their share of government grants. We’re not saying whether awarding this grant to Loblaws was right or wrong. But it’s important for small and medium-sized businesses to understand what is involved in receiving a multimillion dollar grant.
Why Didn’t the $12 Million Grant Go to Smaller Organizations?
The Low Carbon Economy Fund allowed other kinds of organizations to apply for funding including non-profits, the province and municipalities. A key factor on whether an organization would apply or not was if they could understand the bureaucracy that goes along with the grant application process.
In our previous post “Top 5 Myths About Grants in Canada”, we mentioned that one common myth we often hear from companies is that the average Canadian government grant is $100,000. The reality is most Canadian grants range from $3,000 to $20,000 and every grant varies in complexity.
Another misconception about Canadian government grants is that when you are awarded funding, many people think they just get a big cheque and then they’re good to go with their projects. Based on our experience, getting approved for a government grant is just about 20% to 30% of the actual work that is required.
After you get approved, companies often have to submit interim reports, claim documents, change requests and other types of documents. Businesses often have to pay for the expenses first and get reimbursed later from the grant for eligible expenses.
So from the government’s perspective, a key factor in deciding which company gets a grant is if the company has the staff and resources to manage the entire grant process. The larger the grant, the more complex the reporting and project execution gets. This means more documents, time and resources are needed to fulfill the funding requirements, which bigger companies like Loblaws have the ability to do. They are able to capture the opportunity faster.
Small and medium sized companies are often at a disadvantage to compete for larger government funding because they don’t have the capacity to successfully apply and manage these programs. Many smaller companies don’t even know the funding exists.
Low Carbon Economy Fund’s ROI
Whether a Canadian government business grant is a few thousand dollars or a few million dollars, the government wants to ensure as much as possible that they are investing people’s tax dollars effectively to meet the program’s goals.
Every government grant supports specific actions and purposes. The Low Carbon Economy Fund is investing in projects that will generate clean growth, reduce greenhouse gas emissions and help meet or exceed Canada’s Paris Agreement commitments. For Loblaws, their grant application had to demonstrate how they will meet these goals with measurable impact to reduce greenhouse gases.
For this specific grant, a small business would not have the same degree of impact simply because they may only have one or a few locations compared to Loblaws that has 370 store locations. The government can’t justify giving millions of dollars to a small business that couldn’t demonstrate a significant reduction in greenhouse gasses. That could spark another public outcry for different reasons.
Billions in Funding for Small and Medium Sized Businesses
Another incentive for the government to give large grants to big companies is to attract investors to come to Canada to do business. But when this kind of news is shown often in the media, it deters a small business owner from applying to Canadian government business grants. They can’t see themselves being successful in getting funding.
Loblaws is definitely not the first large company to receive a large grant. In 2016, Seaspan was awarded over $500,000 through a training grant for their employees to improve their skills. At that time, they made $800 million in revenue.
How is it that large organizations like Seaspan can qualify for grant that provides up to $10,000 per employee to receive training? Couldn’t that $500,000 gone small businesses where the impact is greater than a large corporation with thousands of employees internationally?
Probably. But don’t be discouraged!
There were over 26 billion dollars of Canadian grant funding and tax credits available last year but only a small percentage of businesses applied! So there is no shortage of money to go around. Some Canadian government business grants only allow small to medium sized businesses to apply.
So if you’re a small or medium sized business, don’t be frustrated by the news of big companies getting large grants. It’s time to get your share of the pie!
So What Can Small and Medium-Sized Business Do?
You’re in luck! We are soon releasing our GetGranted App so you or your staff can save hours and days manually researching for government grants your business could be eligible for.
The app provides you with consolidated summaries of grants that your business qualifies for and reduces the complexity of the grant for busy business owners. It also matches new grants to businesses so that they can leverage programs faster and with greater ease. So even if you’re not a mega company like Loblaws or Seaspan, you can still be in the loop so you can get your share of government funding.
Or, if you want to outsource all of the work, our grant gurus are happy to manage the full application process for you. Our specialty is getting your business non-repayable funding.
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For larger Canadian government business grants, companies have to demonstrate how their projects will meet the program’s goals in a measurable way. Large companies like Loblaws and Seaspan have the resources and staff who can dedicate time to research and effectively apply for these funding programs. They have a significant advantage over small and medium sized companies.
Being awarded a grant doesn’t mean that a company simply gets a big cheque from the government to run a project. That’s why a key factor in adjudicating a grant is if the company can handle the amount of work involved in meeting all of the funding requirements and providing necessary reporting throughout the project. The government needs to know they are getting a good return on their investment.
Small and medium sized companies should not be discouraged by large businesses being awarded grants. There are billions of dollars worth of funding available and smaller organizations can either use our GetGranted app to automatically be updated on government grants or simply outsource all of the work to our grant angels. It’s time for your business to get granted!