To secure funding in Canada, "meeting the criteria" is only the first hurdle. Most programs are oversubscribed, so eligibility is often used as a filter to disqualify applications before the review even begins.

Below is a deep dive into the four pillars of company eligibility for grants and loans in 2026.

1. Structural & Legal Standing

Before looking at your project, the government looks at your "legal DNA."

• Incorporation Status: Most grants (e.g., IRAP, CanExport) require you to be a for-profit incorporated entity for at least 2 years. Sole proprietorships are generally excluded from grants but may qualify for loans like the CSBFP (Canada Small Business Financing Program).

• Employee Count: * Micro (1–4 employees): Eligible for hiring grants (Canada Summer Jobs) but often too small for R&D grants.

  • SME (15–499 employees): The "sweet spot" for 90% of Canadian funding.

  • Large (500+): Restricted to the Strategic Innovation Fund (SIF) or specialized industrial credits.

• CRA Compliance: You must have an active Business Number and be up to date on all tax filings. Any outstanding "unpaid" government debt (including CERB overpayments or tax arrears) is an instant disqualifier.

2. Financial Viability & "Matching"

The government is an investor, not a donor. They rarely fund 100% of a project.

• The 50/50 Rule: Most grants follow a reimbursement model. You must prove you have the cash (or a signed loan agreement) to pay for the project upfront. The grant then pays you back 25–75% of "eligible expenses."

• Net Income Requirements: Programs like the Canada Digital Adoption Program (CDAP) or large provincial grants often require a minimum revenue threshold to ensure the company won't go bankrupt mid-project.

• Stacking Limits: You generally cannot "stack" multiple federal grants to cover more than 75% of a project's cost. You must always have "skin in the game."

3. High-Priority Sectors (The "Winners")

• Clean-Tech & Sustainability: Anything reducing GHG emissions or improving energy efficiency.

• Advanced Manufacturing: Robotics, AI integration in factories, and supply chain sovereignty (especially in steel and critical minerals).

• Agri-Food: Modernizing greenhouses and food processing to ensure domestic food security.

• Export: Companies taking Canadian IP to international markets (CanExport).

• Defence: Following the 2026 Canada Defence Industrial Strategy (CDIS), companies in aerospace and dual-use tech are seeing a surge in available capital.

4. Exclusionary Factors (The "Red Flags")

Even if you fit the above, these factors can disqualify you:

• Passive Income: Real estate holding companies and investment firms are almost always ineligible.

• Retail/Service "Status Quo": Opening a second location of a standard hair salon or coffee shop rarely qualifies for grants (though loans are possible).

• Ineligible Expenses: You cannot use grant money for executive bonuses, dividend payments, or "business as usual" costs like rent and utilities (unless specifically part of an R&D project).

• Project Already Started: If you have already signed a contract or paid a vendor before your application is approved, that expense is typically ineligible for reimbursement.

Supplementary Information about Grants