For businesses looking to bootstrap their way to growth, one option is to seek government funds.

While there is little government funding for startups, according to Ken Charbonneau, partner at KPMG, there are two programs companies should explore.

One is the Scientific Research and Experimental Development program (SR&ED) administered by the Canada Revenue Agency.

The other is the Industrial Assistance Research program (IRAP), jointly administered by the National Research Council of Canada and Technology Partnerships Canada, a special operating agency of Industry Canada.

The SR&ED program is described as a "federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada that will lead to new, improved, or technologically advanced products or processes".

Tax credits can be given for expenditures such as wages, materials, machinery, equipment and some overhead.

Canadian-controlled private companies with less than $200,000 in taxable income can receive a refundable investment tax credit of 35 per cent, to a maximum of $2 million of expenditures. Other Canadian corporations, proprietorships and partnerships can receive a tax credit of 20 per cent of qualifying expenditures, according to the Canada Revenue Agency.

The SR&ED tax credits are valuable in Ottawa because the majority of startups in this city are research-intensive, said Mike Darch, executive director of global marketing at the Ottawa Centre for Research and Innovation.

"We tend to be tech-oriented. These programs fit right into the programs our small businesses do."

According to the criteria, projects that qualify for SR&ED credits "must advance the understanding of scientific relations or technologies, address scientific or technological uncertainty and incorporate a systematic investigation by qualified personnel".

Most startups in town have no trouble meeting the criteria, Darch said.

"The main advantage (to the program) is it is a refundable tax credit."

Although the credits have been around for a number of years, Darch said the process to access the funds has become much simpler.

"It's a much more user-friendly program now."

IRAP, which has an international reputation and success rate, helps smaller companies by giving them a grant in the early stages of research, said Darch, although companies have to prove the merit of their ideas.

Areas eligible for funding by IRAP are enabling technologies, environmental technologies and aerospace and defence. The program "supports the pre-competitive development of new or significantly improved products, processes or services, as well as initial demonstration and pilot projects", according to the National Research Council of Canada.

Key criteria for IRAP funding include a bootstrapped company having some cash to spend on the product, Charbonneau said.

For technology startups, both programs are a viable starting ground.

"For small businesses, these are the (two) programs that are easiest to get started with," said Darch. "I'd say, increasingly, most (startups) take advantage of the programs."

In April, the Ottawa Wireless Cluster released a survey that found government programs fund 25 per cent of companies in that cluster, while 31 per cent are funded by owners and founders. Only 11 per cent benefit from venture capital and three per cent benefit from angel investment.

SR&ED tax credits

Nature of Benefit: Cash or tax credit

Cash Flow Timing: The claim is submitted for costs of each project in each fiscal year and the benefit is paid within four months after filing claim

Eligible Activities: R&D projects of any size (excludes work in field of humanities)

Maximum Contribution: Can reduce R&D costs up to 68.5 per cent

IRAP program

Nature of Benefit: Non-refundable cash grant for R&D activities

Cash Flow Timing: Must be approved before the project starts and funding is paid by installments over the course of the project

Eligible Activities: Technical feasibility studies, R&D and technical analysis and assistance

Maximum Contribution: Fifty per cent up to $200,000

Source: KPMG