Regional Economic Growth through Innovation Steel and Aluminum Initiative – Applicant Guide

Notice

The application period for the Steel & Aluminum Initiative is now closed.

FedDev Ontario received a high number of applications for this initiative and demand exceeds the amount of funding available.

Applications are currently under assessment.

Thank you for your interest.

Note: This application guide has been updated and is available as reference only.

Table of Contents

Part I: Initiative guidelines

Overview

Canada's steel and aluminum sectors are key contributors to the Canadian economy, providing well-paying jobs and key inputs for major industries.

As part of a heavily integrated North American Supply Chain, Canadian small- and medium-sized enterprise (SME) users of steel and aluminum play an important role in transforming these inputs into finished or semi-finished products for the manufacturing, defence, aerospace, energy, automotive and construction industries. However, global market dynamics have significantly impacted SMEs operating within Canadian steel and aluminum supply chains. In this environment, SME users of steel and aluminum are challenged to make investments to strengthen their productivity and competitiveness.

In response, on March 11, 2019, the Government of Canada announced the launch of the Regional Economic Growth through Innovation Steel and Aluminum Initiative. Delivered by regional development agencies (RDAs) across the country, this $100-million national initiative, provides non-repayable contributions to Canadian, downstream, SME steel and aluminum users for investments in innovative projects that will enhance productivity and/or augment firm competitiveness. These investments are expected to maintain and create jobs as well as promote economic growth through adoption of innovative technologies and processes.

In southern Ontario, the Federal Economic Development Agency for Southern Ontario’s (FedDev Ontario) allocation is $39.04 million.

The Application period for the Steel and Aluminum Initiative is now closed.

FedDev Ontario received a high number of applications for this initiative and demand exceeds the amount of funding available.

Please note: Priority is given to applications received from March 11, 2019 to April 8, 2019.

The Regional Economic Growth through Innovation Steel and Aluminum Initiative provides non-repayable funding, ranging from $150,000 to $1 million to firms that are pursuing business growth and expansion by enhancing productivity/competitiveness. Funding decisions will take into account the minimum amount required to carry out the project and the level of innovation undertaken by the project. Applicants are eligible to receive up to 45 percent of total eligible projects costs. All project activities must be completed by March 31, 2020.

All project applications are evaluated on their ability to achieve the Initiative's objectives and on their relative strengths in the following areas:

  • Financial capacity;
  • Management capability;
  • Market potential/demand;
  • Economic benefits;
  • Innovation benefits; and
  • Public benefits.

Only the strongest applications that demonstrate the highest merit and fit with objectives will be considered for funding.

Incomplete applications cannot be assessed and may be deemed ineligible.

Objectives

The objective of this Initiative is to help bolster the productivity and competitiveness of SMEs operating within the Canadian steel and aluminum supply chain through investments in innovative projects. These investments are expected to maintain and create jobs as well as promote economic growth through adoption of innovative technologies and processes.

More specifically, the Regional Economic Growth through Innovation Steel and Aluminum Initiative will:

  • Assist firms with high growth potential to scale up and expand;
  • Support technology demonstration and the commercialization of new technologies;
  • Encourage the early adoption or adaptation of leading-edge technologies and processes to improve productivity; and/or
  • Increase businesses' capacity to grow.

Eligibility

I. Eligible Recipients

Applicants must meet the following eligibility criteria:

  • Businesses such as: partnerships, social enterprises, incorporated companies, corporations or co-operatives, or an Indigenous organization such as Indigenous/First Nation/Métis Settlement owned businesses, and all other types of enterprises;
  • Employ between 10 to 499 individuals on a full-time basis in Canada;
  • Intensive users of steel or aluminum (i.e., steel and/or aluminum expenditures are equal to or greater than 20 percent of total cost of goods sold); and
  • Capable of demonstrating plans for projects pursuing productivity enhancements, and/or innovations to augment firm competiveness.

II. Eligible Activities

Eligible activities include activities that support and accelerate business growth and competitiveness. Project activities defined as product and process improvements linked to productivity enhancing investments or operations, will be prioritized. These activities may include:

  • Productivity Improvement: acquiring, adapting, adopting new technologies, and/or processes; process re-engineering; improving manufacturing capacity.
  • Business Scale-Up: market development/expansion; diagnostics; adopting best management practices, processes and systems; business opportunity development.
  • Technology Commercialization: late stage product development geared toward market diversification and growth, such as technology showcasing and technology demonstration.

III. Eligible Costs

All costs must be reasonable and directly related to the eligible project activities. Eligible costs may include, but are not limited to:

  • Cost of labour (e.g., wages and benefits);
  • Capital costs (e.g., purchase of machinery, equipment);
  • Operating costs that are directly related to the project (e.g., management fees), up to 20 percent of the total project cost;
  • Professional, advisory and technical services;
  • Costs related to intellectual property;
  • Technological development and commercial demonstrations;
  • Subcontracting costs;
  • Production and distribution of promotional material and management tools; and/or
  • Maintenance costs.

IV. Ineligible Costs

Costs that are deemed unreasonable, or not directly related to project activities will be ineligible for reimbursement. These include, but are not limited to:

  • Basic and applied research;
  • Land and buildings acquisition;
  • Goodwill;
  • Entertainment expenses;
  • Salary bonuses and dividend payments;
  • Allowance for interest on invested capital, bonds, debentures and other debts;
  • Losses on investments, bad debts and associated expenses, other projects and contracts;
  • Refinancing of existing debts;
  • Amortization or depreciation of assets;
  • Federal and provincial income taxes, GST (recoverable portion), taxes or surtaxes on excess profit;
  • Provisions for contingencies;
  • Lobbying activities or commissions paid to consultants to secure funding; and/or
  • Donations, dues and membership fees.

Costs incurred prior to application submission date or after March 31, 2020, will not be eligible.

Funding

Financial Assistance

  • Minimum funding request of $150,000 up to a maximum of $1 million. Only one application per firm is permitted under the Initiative.
  • Contributions awarded will be based on the minimum amount required to carry out the project, and the level of innovation undertaken by the project.
  • Applicants are eligible to receive up to 45 percent of eligible projects costs (e.g., for strong innovation projects that represent a forward-looking strategy aimed at advancing productivity, competitiveness and the growth potential of the firm over time).
  • All contributions are non-repayable.
  • Total government assistance, from all sources (federal, provincial, municipal), will be limited to 75 percent of eligible costs.

Financial assistance from government programs may have tax implications for a business. It is recommended that applicants obtain advice from a qualified tax professional.

Disbursement of funding

Payment of contributions will be based on reimbursement of eligible expenditures.

If you are successful in obtaining funding for your project, FedDev Ontario will provide funding based on submitted claims. FedDev Ontario will reimburse you for the approved portion of eligible project costs that you have incurred and paid. Since successful applicants must submit a claim for reimbursement, there will be a delay between the time costs are incurred, and when claimed costs are partly reimbursed. Successful applicants will therefore need to plan their project cash flow accordingly. FedDev Ontario will provide detailed instructions on this process to those applicants approved for funding.

Other Government Assistance, Science Research & Experimental Development and Other Tax Credits

FedDev Ontario considers tax credits received for activities undertaken between the project's start and end date as a source of government assistance. Such credits are considered for calculating the total amount of government funding that has been provided to a project.

Successful applicants who are in receipt of Scientific Research & Experimental Development (SR&ED) tax credits and other similar federal or provincial tax credits for activities defined in the project are required to inform FedDev Ontario. FedDev Ontario is required to take into account all federal, provincial and municipal government assistance that will be obtained for your project. This calculation includes all of the tax credits to which your company may be entitled. The total of these government contributions must not exceed 75 percent of the eligible costs. Applicants are advised to seek independent professional advice to determine the potential effect of Regional Economic Growth through Innovation Steel and Aluminum Initiative funding on project activities for which SR&ED tax credits, or other federal and provincial tax credits, are likely to be sought.

Application process

  • The application period for the Steel & Aluminum Initiative is now closed.
  • Priority is given to applications received on or before April 8, 2019.
  • Multiple and concurrent project submissions from the same applicant are not permitted.

Application for Funding

A sufficiently detailed Application for Funding was required, which allows FedDev Ontario to thoroughly review and validate the information against the eligibility criteria.

Submissions to the Regional Economic Growth through Innovation Steel and Aluminum Initiative must have included:

  • A completed Application for Funding, with a request of at least $150,000 and no more than $1 million.
  • The company's audited financial statements for the past three years. If audited statements are not available for the current operating year, acceptable financial statement standards could include:
    • Review engagement;
    • Notice to reader; or
    • CFO attested, or by the CEO if a company does not have a CFO.

Applications for Funding are assessed based on the mandatory Regional Economic Growth through Innovation Steel and Aluminum Initiative criteria, as well as the viability of the firm and innovation, economic and public benefits of the project.

Assessment process

The Regional Economic Growth through Innovation Steel and Aluminum Initiative assessment is a competitive process. Applications are evaluated on their ability to achieve the Initiative’s objectives and on their relative strengths in the following areas:

  • Financial capacity;
  • Management capability;
  • Market potential/demand;
  • Economic benefits;
  • Innovation benefits; and
  • Public benefits.

Confidentiality

All proprietary data, commercially sensitive information and potentially valuable results or ideas will be protected from unauthorized, inadvertent or untimely disclosure. This information will be treated in accordance with the Access to Information Act and the Privacy Act.

These laws govern, protect and limit the collection, use and disclosure of personal and confidential information by federal government departments and agencies. Confidential commercial information will not be shared without the applicant’s consent.

Reporting requirements

All contribution agreements will include performance indicators to measure the individual project performance and the project’s effectiveness relative to objectives of the Initiative. Recipients will be required to submit, along with funding claims, regular progress reports and financial statements throughout the duration of the project.

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