What is your financial capacity?

Your company would like to apply for government funding for an interesting project. From what you can tell, you meet all of the eligibility requirements. But do you meet the financial criteria?

Before submitting your application, consider the following: Have you conducted a proper analysis of your financial capacity? Without governmental funding, are you able to support the launch of a new project, product or process?

It is important to carefully consider the eligibility criteria of the specific government program you’re hoping will fund your project. Typically, you need to submit your financial statements from the last three years, as well as your forecasts for the next two years. The government will evaluate your capacity to pay for the cost of your project, either through a loan, a line of credit or out of your own assets.  Your plan should include a financial package from all possible sources. For example, some projects require you to contribute between 20% – 50% of your total costs. Your contribution could in this case come from your own capital and a bank loan.

Your financial data analysis must also contain your company’s paid up capital which will be used to determine if you are eligible for certain programs, as well as the amount of government assistance you are entitled to. A number of forms from Revenu Québec can be used to calculate paid up capital, depending on the type of corporation and year of calculation.

If applicable, the financial health of your company will also be assessed based on any dividends you pay to shareholders. The payment of dividends will indicate that your company is generating enough money to share some of your net profits with your owners. These analytical elements allow the government to establish your company’s profitability and bottom line.

In order to obtain a grant, you must appear sufficiently profitable, demonstrate continued success, or show significant growth potential.  You must also provide enough justification as to why government funding is needed to carry out your project, as well as the benefits your project can offer at the regional, provincial and national level. Finally, make sure you’re prepared to present your financial capacity!