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In Ontario, both the federal and provincial governments make
financial support available to eligible businesses under a variety
of programs. Often these programs provide direct subsidies in the
form of grants, loans, loan guarantees and equity investments. From
a policy perspective, some of the programs are aimed at regions,
such as Northern Ontario, or specific sectors, such as agriculture,
digital media, clean technology and health sciences. The more
broadly based programs are generally focused on job creation.
Owners and managers of businesses, particularly small and medium
sized enterprises (SMEs), naturally look for sources of cash to
finance growth. This is particularly the case in the current
economic environment, where venture capital and bank loans are hard
to come by, especially for SMEs and start-ups. To assist those
owners and managers, we have compiled a list of direct business
support programs which are available from the governments of Canada
and Ontario to qualifying businesses in Ontario. The list consists
of a total of 96 programs, available in the following
categories:
The programs identified offer grants, loans, loan guarantees,
equity investments or (in some cases) tax refunds in differing
amounts and subject to various eligibility criteria and conditions.
The list excludes indirect financial support programs which utilize
tax credits, tax exemptions, export guarantees, etc. and also
excludes programs offered by local municipal governments. While the
list is comprehensive, it may not be exhaustive, since the array of
direct financial support programs is so large and diverse. The list
only covers subsidies for private businesses, and excludes programs
for municipalities, universities, schools, hospitals, etc.
On February 15, 2012, the Commission on the Reform of
Ontario's Public Services (Drummond Commission) concluded that
"Ontario's hodgepodge of direct and indirect programs is
fragmented and lacks clear and coherent objectives." The
Commission found that in 2011 the Ontario government spent over
$1.3 billion in direct business subsidies through 44 programs
across 9 ministries. This did not include another $2.3 billion of
indirect support to businesses through tax credits and lower
corporate income tax rates for small businesses and manufacturing
income. The Commission argued that all business subsidies, both
direct and indirect, are generally inefficient because they can
distort normal business decisions and risk analysis, and that the
lack of reliable data on outcomes makes it difficult to evaluate
program costs and effectiveness. The Commission recommended that
the provincial government wind down all of its direct business
support programs and pool the funds into a single envelope to fund
programs which focus on productivity growth in the private sector,
rather than job creation.
Will that happen? Time will tell. As a matter of public policy,
it is hard to argue with the Commission's recommendations to
revamp and refocus all of the province's existing direct
business support programs. But until that happens, owners and
managers of Ontario-based businesses which qualify for the current
programs will, and should, continue to utilize those programs. It
is our hope that the list we have compiled will assist them to
identify applicable programs and assess their eligibility.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
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