In Canada, SMEs are an indispensable and crucial element of the economy. For instance, small businesses comprised about 98% of all employer businesses in 2021. Not only that, SMEs employed almost 13 million individuals, comprising close to 36% of the total labour force in 2020.
In short, the footprint and impact of small and medium businesses have tremendous potential to create employment and drive economic recovery in Canada. With this realization, the Canadian policymakers have shown resolve and commitment to help the SME sector.
In a bid to empower Canada’s SMEs to recover better and become the wheels of the overall economic recovery of the country, Prime Minister Justin Trudeau recently announced the launch of the Canadian Digital Adoption Program(CDAP).
Want to learn more about CDAP? Keep on reading.
In this article, firstly, we will discuss the immediate need for launching CDAP. Secondly, we will discuss what CDAP can do for Canadian SMEs. Further, we will discuss the two CDAP streams and their focus areas. Thirdly, we will discuss how you can choose the right stream out of the two. And finally, we will discuss who can benefit from the program and the application process. So without further ado, let’s begin.
What is CDAP?
The Canadian Digital Adoption Program(CDAP) was first announced in the 2021 Budget. The program seeks to enable Canadian small and medium-sized enterprises(SMEs) to adopt digital technologies and build & grow their online presence.
The CDAP is an investment of $4 billion in total. Of the total, the Canadian government has committed $1.4 billion in the form of advisory services to SMEs and grants. The remaining $2.6 billion amount can be availed as loans from the Business Development Bank of Canada(BDC). Under the program, the BDC will sanction loans to SMEs to help them cover the implementation costs of digital technologies.
The program aims to offer funds to for-profit small and medium businesses. The idea is to help them gain a competitive edge by digitizing operations and leveraging eCommerce opportunities.
The program shows the commitment of the government to prioritize the growth of small businesses amid a wave of measures for national economic recovery. According to the government’s figures, the CDAP seeks to empower up to 160,000 SMEs in their pursuit of digitalization. The funding has an estimate of creating up to 30,000 new jobs as well. It aims to provide training and work opportunities to young Canadians.
Under the CDAP, Canadian SMEs will get the opportunity to assess their digital readiness. Based on the assessment, these SMEs can then apply online for loans and grants. The loans and grants are supposed to help them assimilate into the digital economy based on their specific needs, size, and objectives/goals.
The CDAP was finally launched in the first week of March 2022. It aims to provide SMEs with professional support in addition to funds for a smooth transition to the digital economy. The goal of the CDAP is to strengthen the Canadian economy, help create more jobs, and modernize the way people conduct business.
The need for CDAP
We have a better understanding of the pandemic’s impact on businesses now that the world economies are slowly getting back up on their feet after the severe jolts of Covid-19. The growing understanding of these impacts has shifted the focus towards the adoption of technology in business processes.
The reason for this shift can be attributed in part to how digital technology-enabled businesses handled the economic impact of the pandemic. The other reason for the same is the dismal economic performance of the SMEs that lacked digital integration.
The businesses with better integration of digital technologies, irrespective of their size, could continue their operations and generate some revenue. On the other hand, the businesses that lagged in digitalization faced more severe impacts that led to lay-offs, negative growth rates, and much more.
The Brookfield Institute of Innovation and Entrepreneurship came out with a report in 2021 on the need for technology adoption for SMEs. The report discussed how the SMEs with higher technology adoption rates were in a better position to weather the impacts of the pandemic.
Citing the research conducted by the BDC(Business Development Bank of Canada), the report argued that even in the absence of the pandemic, technology adoption in business processes could increase sales and profit for SMEs.
According to the BDC research, by 2021, more than fifty percent of the SMEs in Canada didn’t have ample technology integration. Not just that, the report also found that a majority of these SMEs lacked the leadership and skills to integrate more and more tech into their operations.
The report also highlighted how this lack of digital technology integration dented the capability of Canadian SMEs to compete with their global counterparts. Moreover, the report also detailed how this predicament added to Canada’s productivity gap with the USA.
Additionally, during the pandemic, retail eCommerce emerged as a saviour, especially for small businesses with digital readiness and capabilities. In Canada, the year-on-year retail eCommerce grew by a staggering 110% in May 2020 as compared to what it was a year before.
The findings of BDC’s research and the success of retail eCommerce during the pandemic only added to the government’s long term plans to:
- Help SMEs leverage the large influx of customers on the digital marketplaces.
- Put in place mechanisms and schemes to strengthen the Canadian economy’s long-term competitiveness on the global stage.
But the single most immediate need behind launching the CDAP is to accelerate the post-pandemic recovery of the economy through digital transformation.
What does CDAP mean for Canadian SMEs
As we have mentioned, SMEs are the backbone of Canada’s economy. Given the value they add to the economy, CDAP is but a crucial precursor to the digital overhaul of the way small business owners approach their business processes.
The way Canadians conduct business has changed rapidly in the last half a decade or so. The focus has shifted to digital tools and using them to improve customer experience.
Therefore, with appropriate and successful implementation, the CDAP will prove to be the gateway for many reluctant SME owners to taste the fruits of going digital.
Moreover, the CDAP will impact Canadian SMEs in the following ways:
- CDAP will promote a change in culture
In addition to financially helping SMEs with their transition to the digital economy, the CDAP can play a vital role in inculcating a digital culture among them. The digital culture is an extension of the digital literacy of businesses.
With a lack of digital literacy, businesses end up adopting digital tools without a clear strategy and vision. The lack of a vision makes it hard for such SMEs to reap the benefits of the digital economy.
The CDAP has the potential to change this culture and inculcate digital literacy and maturity among interested SMEs. CDAP’s provision to offer professional guidance can prove revolutionary in helping SMEs embrace digital technologies mindfully and strategically.
- CDAP will increase the number of digitally capable SMEs
The CDAP, as mentioned earlier, seeks to bring up to 160,000 small and medium-sized businesses into the digital fold. The program will provide financial, educational, and professional aid — making it a juicy proposition for SMEs that have stayed away from digitization for whatever reasons.
- CDAP will spread awareness and reduce reluctance among SME owners
The implementation of CDAP will be accompanied by a drive to spread awareness about the benefits of switching to the digital economy. The drive will aim to reduce the reluctance of SME owners to transition from the traditional mode of doing business. Its implementation seeks to educate SMEs about the potential of digital technologies.
- CDAP will help boost sales and productivity for SMEs
By enabling SMEs to integrate digital technologies, the CDAP will play a crucial role in boosting their sales. The CDAP will help increase sales because taking the digital route will increase the reach of SMEs. Consequently, with more sales opportunities, beneficiary SMEs will be able to increase their profits.
Additionally, digitalization through CDAP will allow SMEs to automate processes and increase their productivity. Better productivity will support increased sales.
- CDAP will help SMEs cater to a larger audience and save costs
Once CDAP helps SMEs, they will be able to leverage their digital presence to reach wider sets of target audiences. With this, they will be able to diversify their user base. This diversification will help them increase their profits. Moreover, digitalization reduces costs of basic human errors, increases efficiency, and promotes better communication with customers.
The Canadian Digital Adoption Program offers support for small and medium enterprises through two streams. These streams are:
- Grow Your Business Online
- Boost Your Business Technology
Let’s understand how these work, and what they do.
Grow Your Business Online
Grow Your Business Online aims to exclusively offer support for smaller businesses that are yet to adopt digital technologies. It aims to provide benefits to about 90,000 smaller businesses that have completely stayed away from the digital economy thus far. It seeks to help these businesses take advantage of eCommerce opportunities.
It is crucial to note here that eCommerce has evolved to mean more than just the practice of selling physical products through an online channel. Today, eCommerce applies to a range of business models. For example, the ability to book services/appointments and digitally pay for them. Therefore, even if your small or medium business doesn’t sell a physical product, you can still be eligible for benefits under this stream.
Now, this stream offers support in two ways:
- In the form of microgrants of up to $2400. These microgrants aim to bear digital adoption costs for beneficiary SMEs.
- Provide access to a network of digital experts to help beneficiary SMEs by introducing them to required digital tools. In addition to the introduction, the network of experts will also help them use these digital tools.
Grow Your Business Online will help create and support this network of young digital advisors/experts. It aims to support up to 11,200 such youth digital advisors.
The government aims to implement the provisions under this stream through delivery partners. These delivery partners will be not-for-profit organizations that have the expertise to support SMEs. The delivery partners will be selected through an application process and will undertake everything from providing microgrants and training and assigning youth digital advisors for SMEs.
Boost Your Business Technology
Boost Your Business Technology aims to help Canadian-owned SMEs level up in their digital technology adoption game. This grant offers support to such SMEs in adopting newer digital technologies.
This stream will provide SMEs with access to a marketplace where they can connect with digital adoption experts. These experts will work with SMEs to understand their business and develop a digital adoption plan tailored to their specific needs.
Under this stream, the grants are significantly bigger and can help with a range of things. These are:
- It offers grants of up to $15,000 to cover up to 90% costs of availing the services of digital adoption experts for developing a suitable plan.
- It offers wage subsidies of up to $7,300 to hire young Canadians for short-term placements to help SMEs with the digital elements of a business.
- It also offers interest-free loans up to $100,000 through BDC to implement the digital adoption plan.
Choosing the right stream
The two streams cater to two different types of SMEs. While the first one aims to help SMEs with zero digital technology exposure, the second one aims to help SMEs switch to even newer digital technologies. The said differentiation in itself should be enough to help SME owners ascertain the choice of the stream best suited to them.
But just in case you want further assistance in deciding the stream that is right for you, you can access this link. Upon clicking here, you will be redirected to the government’s website, where you will be asked to take a very short quiz containing four questions. Your answers to these questions will help you better understand your objectives & goals. This understanding will help you decide the most suitable stream of the two for your business.
Who can benefit from the program
Now that we have learned in detail about the Canadian Digital Adoption Program let’s look at its criteria for eligible applicants. We are dividing the discussion into two parts based on the two CADP streams.
a. Grow Your Business Online
The eligible applicants for this stream are provincially or federally incorporated Canadian not-for-profit organizations such as:
- Research/Innovation Hubs
- Entrepreneur or Business Support Organizations
- A consortium of for-profit and not-for-profit organizations, with one among the latter being the lead proponent
- Indigenous Organizations
- Territorial/Provincial Crown Corporations, agencies or other entities created by Territorial/Provincial Ministries, or Governments
The eligible activities under this stream include, but are not limited to:
- Support eligible SMEs with digital technologies adoption costs through the delivery of micro-grants. The delivery includes assessment, approval, and disbursement of micro-grants.
- Communication activities including marketing and promotion aimed at recruiting businesses.
- Sharing best practices among eligible recipients through the establishment of inclusive networks.
- Creating strategies for innovative business development of eCommerce capabilities of SMEs.
- And a range of other activities to support the goals of Grow Your Business Online.
b. Boost Your Business technology
Given the nature of aids, this stream can provide, applicant businesses need to meet the following eligibility criteria:
- Federal or provincial incorporation, or a sole proprietor who is a Canadian resident
- Have to be for-profit and privately owned
- Have a workforce of full-time employees in the range of 1-499
- Have clocked in annual revenue of at least $500,000 in any one of the last three tax years
The eligible applicants for the Youth Digital Adoption Experts component of this stream include:
- Professionals having a post-secondary designation in a digital technology field such as engineering, computer science, etc.
- Someone with experience in developing digital business models, strategies, products, etc.
- Professionals with at least five years of experience in providing digital advice and tech services.
- Someone who can effectively and clearly outline a digital adoption plan from start to finish.
- Professionals who can legally work in Canada and conform to the necessary code of conduct while delivering services under CADP.
The eligible activities under the Youth Digital Adoption Experts component include, but are not limited to:
- Devising a digital adoption plan with information tailored to the needs of an eligible SME.
- Preparing a detailed report about the products and systems that will be required to implement the plan.
- Preparing a complete report outlining the financial costs of these products and systems.
- Preparing a clear roadmap for implementing the said plan.
- Taking into account all legal and technological considerations to ensure safety and security during the implementation of the plan.
- And other activities around devising and implementing the digital adoption plan.
Finally, let’s look at the respective application processes for the two streams of the Canadian Digital Adoption Program.
First, you need to register on ISED’s (Innovation, Science and Economic Development Canada) website and answer the quiz to find the right stream. Once you have found the right stream for your business, you can apply as follows:
a. Grow Your Business Online
- Download the Grow Your Business Online Application Form and the Project Budget Form here.
- Now, fill out the form after carefully reading the complete Application Guide.
- Attach all of the mandatory documentation as mentioned in the Application guide.
- Click on “Apply now”
b. Boost Your Business technology
- Provide your basic information in the initial application
- Complete the Digital Needs Assessment(DNA) to assess the digital readiness of your business.
- After completing DNA, you have to find a digital advisor to help develop a digital adoption plan.
- Submit the completed digital adoption plan and wait for the grant payment to be processed.
The Canadian Digital Adoption Program is a step in the right direction to introduce digital technologies to SMEs. It has the potential to drive long-term economic growth and help the Canadian economy recover from the jolts of the pandemic. This detailed guide will help you navigate your way through this program.