Buy And Sell A Business

Looking For Government Grants So You Can Buy a Business?

Starting a business from scratch can be tough and also very risky. According to an article by Erin Griffin of Fortune, “Nine out of ten startups will fail”, which is a harsh and unfortunate reality for many businesses.

According to Canada Startups, the Canadian Government offers over 1,500 funding grants, incentives, subsidies and programs with $612mm+ in available funding for entrepreneurs looking to take their startup from idea to commercialization (a very risky bet as I mentioned above). Understandably, the government is taking bold bets on the future and creating an environment where entrepreneurs can develop new products, markets and jobs, so I am all in favour of this. Government grants, incentives, subsidies and programs also do a great job inspiring diversity and inclusivity which are key components to launching more creative and innovative businesses. There is no denying that this is absolutely necessary and proves to have a positive impact on the country.

When potential business buyers are looking to buy a small, existing business, a couple of common questions that tend to arise are: “Where can I get money to buy a business?” and/or “Does the Canadian Government offer grants, incentives or programs for buying a business?”. The Canadian government may offer some grants, incentives or programs to help with the purchase, however the provisions are quite vague as not all of what is offered can be put towards directly buying businesses. Since some deep, tedious research is absolutely necessary to get all of the details about what you can and cannot do with the government’s funding, we decided to save you the trouble and do the research for you. So, here’s the beef…

The Verdict: There are NO grants, incentives, subsidies or programs to help entrepreneurs buy an existing business. Now, the Canadian Government does offer loans, but we were hoping for more. The Canadian Government provides grants, incentives & programs to entrepreneurs looking to start a business or looking to offset research & development (R&D).

This is upsetting as there are so many pro’s to buying a business vs. starting one. Here’s a list of 5 good reasons to buy a business for your reference:

1. Access to an existing customer base

2. Access to a turnkey operation

3. Access to a business with an existing and strong brand

4. Short return on investment

5. Access to a proven market

Why the Canadian government does not offer grants, incentives and programs for entrepreneurs looking to acquire an existing business has us scratching our heads. Granted, entrepreneurs that acquire an existing business have great tax advantages. For example, if an entrepreneur purchases the assets of an existing business, they can use the amortization expense as a deduction from the revenues earned, and if they purchase the shares, they can ultimately sell their shares with a potential capital gain exemption of roughly $850,000.00. There are conditions associated with the latter. Also, entrepreneurs who decide to acquire an existing business have easier access to capital as financial institutions are more likely to fund the acquisition of a profitable, growing, established business versus a start-up.

But, other than those advantages, what does the government actually do to entice someone to dive in and acquire an existing business? There is no denying that the buying and selling of existing businesses is critical to economic growth. It keeps living, breathing, money making entities alive and therefore creates some job security and maintains the flow of tax dollars to the government, both corporate and personal. Wouldn’t it be wise to help nudge entrepreneurs to buy existing businesses in addition to starting them from scratch?

What do you think? Share this and let us know.

From The BizON Blog Team!

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Opinions expressed here by Contributors are their own.

Looking For Government Grants So You Can Buy a Business?
4 mins (818 words)