Global Affairs Canada (GAC) recently announced new eligibility criteria regarding CanExport, a non-repayable contribution designed to help Canadian small and medium businesses (SMBs) export their products and services to international markets.
Why These Updates Matter for Startups and SMBs
Previously, qualifying companies had at least one full-time employee, as well as revenues greater than or equal to $200,000. Under this criteria, the program successfully helped over 1,000 businesses access global market opportunities, but now the Canadian Trade Commissioner Service (TCS) wants to broaden the scope of the program.
Smaller companies with zero full-time employees and $100,000 in revenue are now eligible candidates for the program. The renewed criteria accommodates in-revenue startups who typically favor subcontractors or part-time employees in the early years.
An additional SMB pain point was addressed: the timing of payments from GAC to qualifying SMBs. The issuance of CanExport payments always lagged behind the actual company expense. Companies who were accepted into the program periodically submitted expense reports and the TCS would reimburse 50% of the expenditures thereafter. Now, qualifying SMBs have the ability to receive up to $30,000 prior to incurring any costs.
This new payment feature smooths out a company’s cash flow and makes CanExport that much more attractive for eligible SMBs.
Larger Enterprises Win Too
While the definition of an SMB was broadened to accommodate more companies downstream (i.e. startups), larger companies now also fit within the criteria of the program.
The earlier version of CanExport excluded companies with revenues greater than $50M and a headcount greater than 250 full-time employees, but now GAC has doubled the maximum limit to $100M and 500, respectively.
Understanding Regional Differences
GAC also acknowledges that not all international markets are created equally. Emerging markets, such as China, Brazil, and India will now be divided by region. This will effectively allow companies to target multiple regions within a given country without any downtime between trade missions.
Expect More Funding for CanExport
GAC is constantly revisiting the effectiveness of CanExport and has showed a history of listening to SMEs to improve the administration of the export incentive. They were one of the first agencies to offer an online application form and the processing times are some of the fastest around.
Since it’s launch in 2016, it has received increasingly larger tranches of funding. Initially, $50M was committed over five years, earlier this summer another $40M was earmarked, and finally, an additional $100M will be made available over the next six years.
Current Constraints Around CanExport
While we are bullish on the new updates to the program, there are certainly further improvements to be made to accommodate the needs of SMBs.
For example, given that the minimum contribution from GAC is $10,000, qualifying companies must plan to spend at least $20,000 in a given trade mission. This minimum threshold effectively penalizes companies who are capital-efficient and run lean business development operations.
While the revenue and headcount thresholds were reduced to accommodate smaller companies, we would like to see the minimum spending limit reduced accordingly.
Need Help with your CanExport Application?
If you plan to attend a trade show or visit prospective clients internationally, be sure to consider this program before incurring any costs.
If you have questions or comments, please do not hesitate to contact Alexander Bramos, Advisor at R&D Partners at 1-800-500-7733 for more information.