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

Table of Contents

Part I: Program Details

• Overview
• Objectives
• Eligibility
  • I. Eligible Recipients
  • II. Eligible Activities
  • III. Eligible Costs
  • IV. Ineligible Costs
• Funding
• Disbursement of funding
• Other Government Assistance, SR&ED and Other Tax Credits
• Application process
• Application
  • Accessing and submitting your application
  • Steps for Submitting your Application
• Assessment process
• Confidentiality
• Reporting requirements

Part II: SME Fund for Steel and Aluminum– Application Guide

• Overview
• Completing the application for funding
  • FedNor Application for Financial Assistance Form
  • Annex - Steel and Aluminum Initiative
• Additional Documentation

Part I: Program Details

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. This new Initiative, delivered by regional development agencies (RDAs) across the country, is a $100 million program, that will provide 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.

On March 11, 2019 the Federal Economic Development Initiative for Northern Ontario (FedNor) launched a call for project applications under the Regional Economic Growth through Innovation Steel and Aluminum Initiative. Priority will be given to applications received from March 11, 2019 to April 8, 2019. Applications will be accepted on a continuous basis, beginning on March 11, 2019, until all funding has been fully allocated. SME intensive users of steel or aluminum (i.e., steel and/or aluminum expenditures equal to or greater than 20% of total input costs), are invited to submit a project application for funding consideration.

The Regional Economic Growth through Innovation Steel and Aluminum Initiative will provide 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% of total eligible projects costs. All project activities must be completed by March 31, 2020.

All project applications will be 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.

It is highly recommended that you read this Applicant Guide before submitting an application form. Applicants are encouraged to address all submission requirements and contain sufficient detail to enable thorough review and assessment. Incomplete applications will not be assessed or considered for funding.

Objectives

To help bolster the productivity and competitiveness of SME 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;
• 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% of total input costs); and
• Capable of demonstrating plans for projects pursuing productivity enhancements, and/or innovations to augment firm competiveness.

II. Eligible Activities

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% 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
• 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
• Donations, dues and membership fees.

Costs incurred prior to application submission date 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% of eligible projects costs (i.e., 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 will be limited to 75% 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, FedNor will provide its funding based on submitted claims. FedNor 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. FedNor will provide detailed instructions on this process to those Applicants approved for funding.

Other Government Assistance, SR&ED and Other Tax Credits

FedNor considers tax credits received for activities undertaken between the project 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 FedNor. FedNor is required to take into account all federal, provincial and municipal government assistance that will be obtained for your project. This calculation includes all the tax credits to which your company may be entitled. The total of these government contributions must not exceed 75% 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

• A continuous intake of applications will be accepted from the launch of the program on March 11, 2019, with priority given to applications received on or before April 8, 2019.
• Once the funds are fully allocated, proposals will no longer be accepted.
• Multiple and concurrent project submissions from the same applicant are not permitted.

Application

To be considered for funding, projects will have a complete and sufficiently detailed application, which will allow FedNor to thoroughly review and validate the information against the initiative's eligibility criteria.

Submissions to the Regional Economic Development through Innovation Steel and Aluminum Initiative must include:

• A completed Application Form, with a request of at least $150,000 and no more than $1 million.
• The company's audited financial statements for the past 3 years. If audited statements are not available for a specific 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.

The application will be assessed based on the mandatory Regional Growth through Innovation Steel and Aluminum Initiative criteria, as well as the viability of the firm; and the innovation, economic, and public benefits of the project.

Accessing and Submitting Your Application

The application for financial assistance package consists of the following documents:

• FedNor Application for Financial Assistance Form;
• Annex - Regional Economic Growth through Innovation – Steel and Aluminum Initiative;
• Three (3) years Financial Statements;
• One (1) year Cost Forecast (or equivalent cash flow statement);
• Declaration on lobbying;
• A Project Plan supporting your application (no specified format); and
• Letters Patent / Incorporation Documents, if incorporated.

Steps for Submitting your Application

• Complete the application for financial assistance package requirements in full, including the required documentation as per Part II of this Application Guide.
• The FedNor Application for Financial Assistance Form is the primary tool used to submit applications to FedNor. Using the "To Add Attachments" feature located on the top of the form, attach ALL other required application for financial assistance package documents to this intake form.
• Complete and attest to the Certification section of the FedNor Application for Financial Assistance Form by selecting the "Submit" button.
• You will automatically receive an acknowledgement notification, including a project reference number.

Assessment process

The Regional Economic Growth through Innovation Steel and Aluminum Initiative uses a competitive process. Applications will be 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. Beyond the parties already mentioned above, confidential commercial information will not be shared without the applicant's consent.

Reporting requirements

All contribution agreements issued under the Regional Economic Growth through Innovation Steel and Aluminum Initiative will include performance indicators to measure the individual project performance and the program's effectiveness relative to objectives. Recipients will be required to submit, along with funding claims, regular progress reports and financial statements throughout the duration of the project.

Part II: SME Fund for Steel and Aluminum – Application Guide

Overview

This Application Guide has been developed to provide instructions to applicants on how to complete a FedNor Application for the Regional Economic Growth through Innovation Steel and Aluminum Initiative.

The purpose of the Application is to:

1. Provide a detailed description of the proposed project, what the business or organization hopes to achieve by undertaking the project, and how the project will benefit the SME operating in globally dynamic steel and aluminum markets; and
2. Demonstrate that the applicant has the management, technical and financial capacity to complete the project.

This Guide is organized according to the sections of the Application for Financial Assistance Form and the Annex – Steel and Aluminum Initiative. When completing the Application for Funding, applicants are expected to complete the fields in each section or indicate if a field is not applicable.

Please limit individual answers to the space provided in the Application for Funding. The use of point form (or bulleted lists) is acceptable, provided that the information is clear. Supplementary materials other than those identified in the application for financial assistance package will not be reviewed as part of the submission.

By completing and submitting the Application for Financial Assistance, the applicant acknowledges that the information contained therein is subject the Access to Information Act and the Privacy Act.

Applicants are encouraged to contact FedNor if they have any questions regarding the Application for Funding. For more information, call 1-877-333-6673.

Completing the application for funding

This section provides information on how to complete the various sections of the FedNor Application for Financial Assistance and the Annex – Steel and Aluminum Initiative.

FedNor Application for Financial Assistance Form

Applicant and Contact Information

1. Legal name of Applicant: The name of the incorporated business or organization.

   Operating name (if different from legal name): The name under which business is publicly conducted. e.g., 123456 Ontario Ltd operating as XYZ Technologies.

2. Organization Description and Mandate: Provide a brief overview, main areas of business which generates revenues for the company.
3. Location and Contact Information: The complete address where the headquarters of the company is located.
4. Authorized Contact Information^{Footnote 1}: Identify and provide contact information for the person who is authorized^{Footnote 2} to represent the business or organization, and who will be the main point of contact regarding the project. Ensure to indicate if the contact is an authorized signing officer.
5. Alternative Contact Information^{Footnote 1}: Identify and provide contact information for a secondary contact that can be reached should the main contact be unavailable. Ensure to indicate if the contact is an authorized^{Footnote 2} signing officer.
6. Mailing Address: Select "Same as" if the mailing address is the same as the physical address (#3). If different, provide the complete mailing address. Date of Incorporation or Registration (YYYY-MM-DD): The date stated on the company's Articles of Incorporation. Business Number / Enterprise Number: The Business Number is a unique nine-digit numerical identifier assigned by the Canada Revenue Agency.
7. Select the type of legal entity: Indicate the type of legal entity.
8. Identify your preferred language of correspondence. Select the language in which you would like to receive correspondence related to your application.

Project Information

1. Project Name: Provide a project title that accurately reflects the activities and outcomes of the project. Should your application be approved, this description will be disclosed on FedNor's public website in accordance with its proactive disclosure guidelines.
2. Project Location: Provide the address where the principal activities of the project will take place.
   Estimated Start Date : The Start Date is the first day you anticipate incurring expenses for your project. Note that project expenses incurred prior to application submission date will be considered ineligible. 
   Estimated Completion Date: The Completion Date is the last day you anticipate incurring expenses for your project. Note that all projects activities must be completed by March 31, 2020.
3. In what Official Language will your project's services be offered?: Select the language which you use to interact with your customers.
4. Please identify the FedNor Program to which you are applying: Regional Economic Growth through Innovation has been pre-selected.
5. Provide a description of the project and the key activities to be undertaken: Provide details on why you are seeking financial assistance, how you will use the funds, and how the funds will support the commercial objectives of your organization.
6. Describe the anticipated measurable economic benefits of the project: Please describe the anticipated economic benefits of the project. This could include, but is not limited to: job creation; job maintenance; business modernization; business expansion; or improved processes, procedures, technologies or services.
   Number of jobs created: Indicate the total number of jobs in full-time equivalents^{Footnote 3} (FTEs) to be created in the time frames listed. Do not include FTEs employed by suppliers or contracted services. Jobs must be a direct result of project activities.
   Number of jobs maintained: Indicate the total number of jobs in FTEs which would be lost without this project in the time frames listed. Do not include FTEs employed by suppliers or contracted services. Jobs must be a direct result of project activities.

Project Costs and Funding Sources

Project Costs

Costs: The following costs categories have been pre-selected for you: Direct Labour, Project Management, Direct Materials, Subcontractors, Equipment, Other Direct Costs. You can add other eligible costs as required. Note that Project Management should not exceed 20% of the total project costs.

Project Funding

Source: Where applicable, select the description that best reflects the funding source - Federal, Provincial or Municipal government body, or non-government.

Status: For each funding source, indicate the status (confirmed, pending, not confirmed).  In the case where your business (Applicant Firm) is a source of funding, indicate yes if you have cash on hand.

Have you already incurred costs or made legal commitments related to the project: If applicable, please describe the costs and/or commitments.

Certification

Certification: Review and complete this section prior to submission.

Annex - Steel and Aluminum Initiative

Additional Applicant and Contact Information

• 1.1 Type of Organization: Indicate if the company is a subsidiary. Provide the legal name of the parent entity and head office location.
• 1.2 Number of years the business has operated: Indicate the number of years you have been in business.
• 1.3 Location of incorporation: Indicate the location of incorporation.
• 1.4 Number of employees in Canada: Identify the number of full-time employees in Canada.
• 1.5 Voluntary Information - Underrepresented groups: Please indicate if your project and/or organisation is led, or majority led by under-represented groups, such as Indigenous Canadians, women, youth, and/or new immigrants. Majority led constitutes an individual and/or a group from one of the identified under-represented groups listed either:
  • Owning 50% or more of the organization; or
  • Having long-term control and management of the business, contribution of capital and an active role in both strategic and day-to-day decision making.
• 1.6 What percentage of your firm's input costs does steel and aluminum represent?: Select the range which represents your firm's steel and aluminum related input costs.
• 1.7 Please provide both your total costs of goods sold and specific costs related to the acquisition of steel and/or aluminum inputs. Provide both your total cost of goods sold and specific costs related to the acquisition of steel and/or aluminum inputs.  This table will help determine the distribution of the applicant's input cost and the relative proportion of the applicant's steel and/or aluminum input cost.

  The information provided in the table may come from the company's Income Statement. A Canadian Controlled Private Corporation can refer to the line items in the T2 Schedule 125 (Income Statement Information) reported annually to the Canada Revenue Agency in order to provide values in the above table.

  Please consult the General Index of Financial Information (GIFI), page 21-22, for line item definitions.

• 1.8 Please describe the impacts of current steel and aluminum market conditions on the state of your business. Describe how the current steel and aluminum market conditions have impacted the state of your business, e.g. material cost increases, reduced sales volume or revenue, lost business or contracts etc. Consider the following:
  • Is your firm suffering reduced revenues, lost market share, are at risk of layoffs etc.? Provide details on the impacts.
  • How is your firm currently mitigating the impacts of the steel and aluminum tariffs?
  • How will the proposed project mitigate the impacts of the current steel and aluminum tariffs?
  • Is the proposed project part of a strategic, forward-looking plan to advance business growth?
  • Does your project include the adoption of innovative technologies and/or processes that will secure the competitiveness of the business in future years?
• 1.9 Provide a brief summary of the key project management staff that will manage the project: List the key management staff who will manage the project and include their prior experience, education, professional designation etc. Please keep your responses brief. For management biographies, please limit 2-3 lines per person and highlight the expertise required to manage and/or complete the project.
• 1.10 Has your company received government funding in the last five years from either federal, provincial or municipal sources: If your company has received assistance from any level of government within the last five years, please list the source of the funds (level of government and program name), and the total money provided by the government.

Additional Project Information

• 2.1 Provide a brief description of the main project objectives: Describe strategic rationale for undertaking your project, how it fits with your mandate and business model (i.e., would be applicable whether funding is obtained or not). How will it achieve the objectives of the Regional Economic Growth through Innovation Steel and Aluminum Initiative?
• 2.2 Provide a brief description of the expected outcomes: Briefly describe the anticipated outcome(s) of the project. The outcomes are the anticipated results from the project. This provides an understanding of how the project will impact the company and what the project is trying to achieve. If you anticipate outcomes will occur after project completion, please describe provide a description of the longer-term benefits of the project.
• 2.3 Please assess your project against the following statements:
  1. The project is a priority for the company and is part of a strategic plan to advance or secure the business.
  2. Management is ready to commit the necessary business resources to enact the project plan.
  3. If approved for support, funding the balance of financing required for the project is already secured.
  4. There is already a clear, established and fully authorized project plan in place to proceed.
• 2.4 Economic Benefit: Describe the benefits to your business that will result from the project, i.e. impact on sales, employment retained or created, etc.
• 2.5 Please estimate the impacts the project will have for your business: Please answer yes or no to each of the five statements.  All values provided under this section must be measurable and verifiable. If the applicant selects "No" for any of the options, then it is not necessary to provide a value in the "Amount" column.

  All amounts reported in this section must be measured from the estimated Start Date of the Project to the End Date of the Project. Any benefits that fall out of this timeframe that the applicant wishes to highlight should be included in the prior question relating to how the project aligns with the Regional Growth through Innovation Steel and Aluminum Fund.

• 2.6 Innovation Benefits: The completion of the project may result in innovation benefits. Choose all that apply and provide supporting explanation for each item separately.
  • Good or Service Innovation: Good or service innovation is the market introduction of a new or significantly improved good or service with respect to its capabilities, user friendliness, components or sub-systems. Good or service innovations (new or improved) must be new to your enterprise, but they do not need to be new to your market.
  • Process Innovation: A process innovation is the implementation of a new or significantly improved production process, distribution method, or support activity for your goods or services. Process innovations must be new to your enterprise, but they do not need to be new to your market.
  • Organizational Innovation: An organizational innovation is a new organizational method in your enterprise's business practices (including knowledge management), workplace organization or external relations that has not been previously used by your enterprise. Organizational innovations must be the result of strategic decisions taken by management. Exclude mergers or acquisitions, even if for the first time.
  • Marketing Innovation: A marketing innovation is the implementation of a new marketing concept or strategy that differs significantly from your enterprise's existing marketing methods and which has not been used before. Marketing innovations require significant changes in product design or packaging, product placement, product promotion or pricing. Exclude seasonal, regular and other routine changes in marketing method.
• 2.7 Public Benefit:
  

  Detail how the project will result in additional public benefits. The intent here is to rate the extent to which this project is likely to secure or increase spinoff activities within the community or fulfill policy goals such as environmental, training or business collaborations.

  • Local Community Benefit: Detail any benefit that flows back the local community by addressing a local need or deficit.
  • Environmental Benefit: Detail any way the project can contribute to clean growth and the transition to a low carbon economy by developing and adopting technologies that reduce GHG and air pollutant emissions through more productive and sustainable processes.
  • Worker Training Opportunity: Training is a program that helps employees learn specific knowledge or skills to improve performance in their current roles.
  • New Business Collaborations: Indicate the forecasted number of formal collaborations or partnerships that will be established during the project. A formal collaboration must include a signed agreement outlining each party's role and contribution toward the project. A collaboration or partnership must be specific to the project activities and contribute to the overall objectives of the project.
  • New Research Collaboration: Indicate the forecasted number of formal collaborations or partnerships with higher education institutions that will be established during the project. A formal collaboration must include a signed agreement between project partners outlining each party's role and contribution toward the project. A collaboration or partnership must be specific to the project activities and contribute to the overall objectives of the project.

Additional Documentation

These documents will allow FedNor to assess your organization's capacity to undertake the proposed project. The following items are required and applications will not be considered without them.

1. 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.
2. One year cost forecast.
3. Declaration on Lobbying.
4. A Project Plan.
5. Letters Patent or Incorporation Documents.