New Canada Digital Adoption Program for Small Businesses

Jose L. Riquelme, CPA, CGA

On March 3, 2022, Prime Minister Justin Trudeau, announced that the Canada Digital Adoption Program (CDAP) is now fully active and ready for qualifying businesses to apply for funding. The purpose of the CDAP is to assist small and medium-sized enterprises (SMEs) “grow their online presence and upgrade or adopt digital technologies.” Here are the details:

This program was originally announced during the 2021 budget, but implementation was pending. The Federal Government will be investing up to $4 billion over four years with the intention to support up to 160,000 small businesses. Of this this total investment, $1.4 billion will be in the form of grants and the remaining $2.6 billion will be interest-free loans from the Business Development Bank (BDC). This is yet another program to assist in the economic recovery of thousands of SMEs that were the hardest hit by the Pandemic.

Program Details

SMEs have two streams to qualify for funding:

1. Grow Your Business Online:

This is intended for smaller businesses involved in retail and in service industries. These businesses include for-profit, co-operatives, and social enterprises that are either incorporated or registered as a sole-proprietorship or partnership and have at least an arm’s-length employee. These businesses may be eligible for up-to $2,400 in micro-grants to assist them in adopting e-commerce technologies, cover costs associated with “website development, search engine optimization, subscription fees for e-commerce platforms, and social media advertising”. The Federal Government’s goal is to assist up-to 90,000 small businesses and to support the placement of up-to 11,200 jobs for youth.

SMEs can apply online here through regional partners that will administer the CDAP and provide technical assistance. Applications are now open, and funding will be provided on first-come, first-served basis.

2. Boost Your Business Technology:

This is intended for larger “SMEs that want to improve their productivity and become more competitive in the digital marketplace.”  To be eligible, the SME must be a Sole-proprietor (owner must be a Canadian resident), or Incorporated under the laws of Canada or a province or territory (must be a Canadian Controlled Private Corporation – CCPC), be a for-profit business, have between 1-499 full-time equivalent employees, and have at least $500,000 of annual revenue but no more than $100,000,000 in one of the previous three tax years. In addition, SMEs will be required to answer a questionnaire confirming certain criteria about business practices and tax compliance. Funding available under this stream includes a grant to cover 90%, up to maximum of $15,000 of the cost of developing a digital adoption plan. In addition, SMEs will be able to apply for an interest-free loan of up to $100,000 from the BDC.

In order to assist in the development of a digital adoption plan, the CDAP includes a roster of expert digital advisory providers in the “Digital Advisor Marketplace” available in the application process. Additionally, SMEs may apply for a wage subsidy of up to $7,300 to employ a post-secondary student or recent post-secondary graduate to assist with the implementation of the digital adoption plan. The Federal Government’s goal is to assist up-to 70,000 SMEs and to support the placement of up-to 16,800 jobs for students.

SMEs can apply online here through the CDAP webpage. Only an Owner or a Director can complete the application form. A Government of Canada Key (GCKey) or a Sing-In Partner (Selected Banks) is required to start the application process which is very straight forward. The SME will be required to answer a questionnaire to assess the knowledge and digital capabilities of the business; this will be used to match the business with an advisor in order to develop a Digital Adoption Plan that meets the needs and goals of the SME. Applications are now open, and funding will be provided on first-come, first-served basis.

Conclusion

According to Statistics Canada data, retail e-commerce increased by more than 110% from May 2019 to May 2020. E-commerce giants have taken the lion’s share of this growth. The CDAP intends to level the playing field in favour of SMEs. Canadian small businesses have demonstrated tremendous resilience through the pandemic; and although hurt, they are not beaten down. Effective use of the funds available through the CDAP will take Canadian SMEs to the next level to provide their products and services to a broader client base, even outside our borders.