Updates on Federal Government Innovation Assistance Plan

On April 17th, the Government of Canada announced the Innovation Assistance Program (“IAP”), a program designed to assist start-ups in the wake of the COVID-19 pandemic. Operating through the National Research Council of Canada Industrial Research Assistance Program (“NRC IRAP”) the IAP is a $250 million fund meant to provide assistance to small and medium-sized enterprises (“SMEs”) that plan to pursue growth and profit by developing and commercializing innovative, technology-driven new or improved products, services or processes in Canada. The IAP specifically targets SMEs that are ineligible for the Canada Emergency Wage Subsidy (“CEWS”), thus filling a gap for pre-revenue start-ups where the 30 percent revenue decline needed for CEWS eligibility may not be an appropriate indicator of their economic hardship. Businesses qualifying for IAP assistance may receive $847 a week per employee or contractor for 12 weeks for a total of $10,164 for each eligible employee.

The IAP application process ran from April 22nd to April 29th, 2020 and attracted applications from more than 4,200 companies across Canada with 2,967 of those being found qualified to move forward in the funding process. In a recent interview, vice president of NRC IRAP David Lisk has stated that NRC IRAP has committed 97 percent of the $250 million fund, with $100 million already distributed to eligible companies. Lisk also added that he expects the remainder of the $250 million to be fully committed by July.

While the government of Canada has recently announced the extension of CEWS, it has made no commitment to expand or provide additional capital for the IAP in spite of the evident demand for help indicated by start-ups. The government of Canada announced expanded eligibility requirements to help SMEs access CEWS in April, but a recent survey conducted by the Council of Canadian Innovators indicated that 56 percent of the 300 tech companies interviewed were still ineligible. As society shifts towards the new post-COVID-19 normal, it remains to be seen what other programs the Government will announce to help Canadian start-ups.

Author: Zhiyao Chen, 2020 Summer Student-at-law