Sometimes, all these subsidies can be confusing. Unfortunately, there’s a lot of misinformation on Facebook groups and the like, and sometimes the explanations aren’t very clear. It’s also important to know that CDAP has two (2) components, i.e. Component 1: Develop your online business and Component 2: Improve your company’s technologies. That’s why we’ve decided to tell you a little more about it, in clear and simple terms!
Part 1: Develop your online business
Component 1 is probably the most popular, and the one we hear the most about. It helps small and medium-sized businesses :
- Increase sales
- Do e-commerce
- Equip themselves with security software
- Communicate effectively with customers
- Improve marketing activities through social networks
- Refine their customers’ online experience
The first component is designed to help SMEs go digital and take advantage of e-commerce opportunities. It aims to help companies become more innovative and creative in the world of online commerce.
What are the eligibility criteria?
You could get a loan of up to $2,400 if your business :
- is for-profit (this includes for-profit social enterprises and cooperatives) ;
- is registered or incorporated;
- is in direct contact with consumers (sells goods and services directly to consumers);
- has at least one employee (other than the owner) OR had at least $30,000 in annual revenues during the most recent taxation year;
- is committed to maintaining the digital adoption strategy for six (6) months.
However, your company is not eligible if it is :
- a chain of companies, a franchise or a registered charity;
- a representative of a multi-level marketing company (pyramid selling);
- a brokerage firm (real estate, investments, insurance, etc.);
- a company that engages in online resale or direct delivery activities that depend on third-party suppliers;
- a wholesale or distribution and manufacturing company (unless it sells directly to consumers).
You must also ensure that your project falls within the eligible categories of activity:
- Creation of a new e-commerce (transactional) website. Please note that the redesign of an existing site is not eligible.
- Adding functionality to your existing site, such as :
- Shopping cart
- Receive online payments via PayPal or major credit cards
- Online catalog creation
- Automated stock control
- Implementation of a tracking system
- Implementation of a performance analysis system
- Integration of online reservation tools
- Implementation of an online ordering and electronic payment system
- Costs related to the installation of an e-commerce platform (Shopify, Amazon, WooCommerce…)
- Hiring an e-commerce consultant
- Creation of a customer database
- Addition of operational software
- Supporting hardware and software up to 20% of total grant amount
- Optimization of website search engine/SEO
What does section 1 cover?
The grant can be used for :
- Develop an e-commerce website or add functionality to your existing site (such as electronic payment, online ordering, search engine optimization…)
- Installing an e-commerce platform (including fees and subscription costs)
- Use of the services of a consultant to help you develop digital marketing strategies. Please note: the grant cannot be used solely for digital marketing or social network advertising; these uses must be combined with an e-commerce adoption plan.
- Cover up to 20% of the total cost of software and hardware
- Manage inventory and sales, offer discounts, maintain a loyalty program or reinforce cybersecurity with e-commerce software.
What happens next?
Once you’ve checked your eligibility, you can submit an application via the CDAP website.
Be careful; only your company can submit an application. Yes, you can ask for help, of course, but never accept that someone else will do the application for you. We can see, especially on Facebook, people offering to apply for you, or $2,400 websites. What happens then is that the person offering you help will apply on their behalf. And legally, in terms of tax numbers, if the $2,400 comes back to you, applying in another name could have serious consequences.
What are the loan terms and amounts?
The maximum grant is $2,400. Once you’ve completed your project, simply submit proof of expenses for reimbursement. You will receive your reimbursement 2 to 3 weeks after submitting your application.
Section 2: Enhance your company’s technologies
Stream 2 offers support to SMEs in adopting new technologies. This support will take the form of grants to offset the cost of hiring digital consultants to develop a digital adoption plan tailored to your business. This grant covers up to 90% of the costs of the adoption plan, with a maximum payment of $15,000.
In addition to receiving compensation from ISDE, you can apply for a loan from the Business Development Bank of Canada (BDC) of up to $100,000, if you have an adoption plan.
Interesting point: The Youth Internship Grant can be up to $7,300 and will be paid in the form of a reimbursement upon presentation of proof of salary payment. (Applicants can only receive a subsidy for a youth internship).
What does section 2 cover?
This is where things can get tricky. The items covered by the CDAP are not all-inclusive, so you need to be careful. It covers:
- Installation of new technologies
- Updating or expanding computer equipment
- Staff training on new integrated technologies
- Hardware and support services related to technology integration
- Additional consulting services on specific elements of the adoption plan
The loan must be used solely for the implementation of a digital adoption plan recognized under the Enhance Your Company’s Technology component of CDAP.
Many people think that the loan can be used to purchase new equipment such as laptops or servers, but think again. It’s for digital auditing only. It’s a loan, not a grant!
How do I qualify?
Like all grants, there are eligibility criteria* to be met, such as :
- Is a sole proprietorship that is a Canadian resident OR is incorporated under the laws of Canada or a province or territory;
- Is a for-profit business;
- Has between 1 and 499 full-time equivalent employees;
- Has annual revenues of at least $500,000, but not more than $100,000,000, in any of the three years preceding the date of submission of the grant application.
Documents that may be required to determine eligibility
Documents may be required in order to obtain the CDAP. Obviously, each case is different, and documents may differ from one application to another.
- Assurance that the applicant is in good standing with respect to all federal, provincial, territorial and municipal laws and regulations;
- Business-related documents that the program deems necessary (articles of incorporation, by-laws and related documents);
- Documents confirming annual income levels, such as notices of assessment or other documents issued by the CRA, or financial statements prepared and signed by a chartered professional accountant (CPA);
- Documents confirming the number of full-time equivalent employees, such as T4 summaries, deductions for Canada Pension Plan, employment insurance premiums and income tax from remuneration or other amounts paid by the applicant to its employees.
What happens next?
After checking your eligibility criteria, and making sure you understand the role of CDAP you can apply:
- Register on the Innovation, Science and Economic Development Canada (ISDE) website
- Develop a digital adoption plan with the help of an ISDE-approved service provider.
- Once the adoption plan is complete, submit the plan and invoices to ISDE for approval.
- Apply for a loan from BDC. Once the plan is approved, log on to the CDAP portal on the ISDE site to access the BDC link and apply for a loan of up to $100,000.
What are the loan terms and amounts?
The BDC offers an interest-free loan of up to $100,000, with a repayment period of 5 years and 12 months, for a total of 6 years. The amount of the loan depends on the size of your business. If your company’s revenues :
- are between $500,000 and $4,999,999, you can apply for a loan ranging from $25,000 to $50,000
- over $5 million, you can apply for a loan from $25,000 to $100,000
Please note that even if the loan application is made under the CDAP, companies must meet both the CDAP eligibility criteria and BDC creditworthiness criteria to be offered a loan.
Starting in 2025, there will be a second phase to this subsidy. We don’t yet know the details, only that it will be available to those who have already obtained a subsidy.
We’ve decided to list the most important points and the answers to the most frequently asked questions. If you still have questions, we invite you to contact the Datazium agency, which was a great help in drafting this article.
*For a complete list of eligibility criteria, please visit the Program Guide.