The Southwestern Ontario Development Fund (SWODF) Business Stream is a government grant for growth-oriented SMEs. It’s a critical source of capital that enables companies to expand their cash flow during large-scale expansion projects. Funding enables manufacturers and other industrial applicants to enlarge production and warehousing facilities for improved productivity and competitiveness.
SWODF applicants can receive up to 10-15% of eligible project costs to a maximum $1.5 million in business expansion grants. Larger projects may also qualify for an additional $3.5M in repayable funding.
This article further explores frequently asked questions about SWODF’s Business Stream, including general program information, eligibility criteria, and how to apply. For a more general summary of the program, please refer to our Southwestern Ontario Development Fund overview blog.
About the Southwestern Ontario Development Fund (SWODF)
What is the Southwestern Ontario Development Fund?
The Southwestern Ontario Development Fund (SWODF) is an Ontario government grant that supports small and medium-sized businesses (SMEs). It also offers a stream of funding for municipalities and non-profits, however, this article will focus specifically on SWODF’s main support for businesses (referred to as the Business Stream).
By offsetting up to 10-15% of eligible project costs, SWODF supports cashflow during facility expansion projects. It enables companies to commit to plant expansion sooner, thus allowing for increased revenues in less time. Companies that use the program often experience improvements to productivity and global competitiveness.
What type of funding does SWODF offer?
SWODF offers a combination of non-repayable grants and repayable loans, although most applicants tend to only use the small business grant component. The type of funding awarded typically depends on the project’s budget, with larger projects ($10M or greater) receiving more options for SWODF financing. If applicants choose to utilize the government loan portion, it’s offered at a 0% interest rate. This gives applicants more cashflow without incurring interest fees.
How much business expansion funding is available?
The SWODF program uses project size to determine how much funding can be awarded:
- Smaller Projects: Expansion projects incurring less than $10 million in eligible project expenses only receive the non-repayable grant contribution of up to $1.5 million.
- Larger Projects: Expansion surpassing $10 million in eligible expenses may qualify for a no-interest loan of up to $5 million. $1.5 million can be forgiven if the project hits certain performance milestones, effectively providing a $1.5M grant and $3.5M loan.
Can SWODF be combined with other government funding programs?
As a provincially-funded program, ASCIP cannot be stacked with other Ontario government funding programs. There are two ways where stacking is possible, however:
- SWODF can be stacked with federal government funding sources; however, there are few incentives at the federal level that support capital investment.
- Projects can be planned in phases to use SWODF funding for a “Phase 1” project while “Phase 2” uses different government funding programs.
How long do SWODF projects typically last?
SWODF projects are typically between two and four years in duration. Four years is generally considered the maximum length of time a project can be ongoing. If you anticipate your project will take longer than four years to complete, consider breaking the project into multiple phases.
What are SWODF’s reporting requirements?
Regular project reporting is required to leverage SWODF funding. Once the project has begun, applicants are required to submit quarterly or annual reports to demonstrate progress and provide an update on costs incurred up to that point. These reports are essential to receiving payments from the program; reimbursements are typically made in conjunction with progress reports.
Who administers the Southwestern Ontario Development Fund?
SWODF funding is provided provincially through the Ministry of Economic Development, Job Creation and Trade. All funding awarded through the program comes from a pre-established pool of funds set aside through Ontario’s provincial budgets.
How to Qualify for SWODF Business Expansion Funding
What businesses are eligible for SWODF funding?
To qualify for Southwestern Ontario Development Fund (SWODF) grants, applicants must:
- Provide a minimum project investment of $500,000;
- Have current operations in, or plan to relocate operations to, Southwestern Ontario;
- Be in a priority business sector;
- Be incorporated and have at least three years of financial statements; and
- Maintain at least 10 employees at the time of application.
How many jobs do SWODF projects need to create?
The number of jobs your SWODF project is required to create depends on your current employee count:
- If your business has 20+ full-time equivalent (FTE) employees when you apply for funding, you must create at least 10 new jobs by the end of the project.
- If your business has between 5 and 20 employees when you apply for SWODF funding, you must yield a 50% increase in jobs by the end of the project.
What are SWODF’s priority business sectors?
SWODF’s priority business sectors include advanced manufacturing, information and communications technology (ICT), primary resources processing, life sciences, tourism, and cultural industries. Applicants must represent one of these sectors to be considered for funding.
Are there any sectors not supported through SWODF?
Some sectors are ineligible to receive SWODF funding. These typically include personal and professional services, restaurants, retail, golf courses, primary resources production, construction, and recycling.
What Regions/Businesses Qualify as “Southwestern Ontario”?
Southwestern Ontario is the only geographic region where SWODF funding can be awarded. As such, it’s critical that all applicants operate in this eligible region. While there are also business expansion incentives available in Eastern and Northern Ontario, SWODF will only support businesses with current operations in:
- Waterloo; and
What types of projects are supported by SWODF?
SWODF prioritizes the establishment and expansion of businesses in Ontario. As such, eligible projects must:
- Secure new capital investments;
- Increase and sustain high-value jobs; and
- Provide operational improvements that improve productivity, innovation, and the potential to export goods.
What project types are ineligible for SWODF support?
Most projects that do not focus on the physical relocation or expansion of a business are ineligible for SWODF’s Business Stream. These include:
- Refinancing business operations;
- Relocating business operations (from elsewhere in Ontario);
- Recurring or ongoing operations; and
- Acquisitions and buyouts.
What expenses are eligible?
SWODF supports a wide range of one-time project costs associated with building expansion and technology purchases. These include, but are not limited to:
- Facility modifications, upgrades, or retrofits;
- New machinery or equipment;
- Materials to configure or test upgraded production processes; and
- Project permits, fees, and similar project-related expenses.
For a full list of eligible/ineligible expenses, please consult Mentor Works’ SWODF Business Stream eligibility blog.
Apply for Ontario Business Expansion Funding via SWODF
What is the SWODF application process?
To apply for the Southwestern Ontario Development Fund, all businesses must complete a three-stage process:
- Complete an online eligibility checklist;
- Discuss your project with a SWODF program advisor;
- Develop and submit a full application that reviews the company and project.
What information is required for SWODF applications?
The SWODF program requires a significant amount of business and project-related information to determine whether your application is a good fit. Some of these details include:
- Proof of incorporation;
- Three years of financial statements;
- Letters of support;
- Job creation forecasts; and
- Other documentation to prove the project’s benefits.
How are applications assessed?
SWODF’s application process typically favours projects that:
- Attract business investment to Ontario, either from companies that are new to the province or expanding within it;
- Create high-value, well-paying, sustainable jobs in Ontario;
- Are achievable given the company’s internal and external financing; and
- Are led by an experienced management team with the skills to support long-term project success.
Is there a deadline to apply for the Southwestern Ontario Development Fund?
Applications are accepted on continuous intake, meaning that applicants can apply year-round. Applications should only be submitted for future projects though, so any expenses incurred in the past will not be eligible and can diminish your chances of having the application approved.
How long does it take for SWODF funding applications to be reviewed?
The application process generally takes four to six months to complete. This includes navigating the eligibility checklist, developing your application, and waiting for it to be reviewed by SWODF program officers. Companies should consider applying at least four to six months ahead of their project start date to ensure it’s reviewed prior to incurring eligible expenses.
To discuss your business’ eligibility for SWODF and learn how to optimize the application process with the support of a Government Funding Planner, please contact Mentor Works.