Yes — grant money can sometimes be used for equipment and capital purchases, but it depends on the program. In Canada, many business grants focus on productivity, innovation, or growth, and those goals often allow equipment costs. The key is understanding what counts as eligible equipment, how it must be used, and when purchases can be made.
Across federal and provincial programs, capital expenses are usually more restricted than operating costs. Some grants cover them directly, others cap them, and many exclude them altogether. Understanding the difference between eligible and ineligible expenses can save you from costly mistakes.
Most Canadian grant programs define eligible expenses very clearly. Equipment and capital purchases are typically allowed only when they directly support the funded project, not general business operations.
Here’s how eligibility usually breaks down.
Many grants allow equipment when it is new, project-specific, and productivity-focused, such as:
For example, the Regional Economic Growth through Innovation (REGI) program, delivered by the Atlantic Canada Opportunities Agency, supports business projects that improve productivity and competitiveness. Under its Business Scale-up and Productivity stream, eligible expenses can include technology adoption and productivity improvement costs, which may involve equipment purchases when tied to the approved project.
REGI funding is offered as:
Eligible costs and funding structure vary by project and stream.
Even when equipment is allowed, many capital-related costs are not. Common exclusions include:
Most programs also require that:
These conditions are usually written into the funding agreement.
Grant assessors look at purpose, timing, and necessity.
If the equipment directly supports the funded activity — such as scaling production or adopting new technology — it is more likely to qualify.
Most grants do not reimburse costs incurred before approval. Buying equipment early is one of the fastest ways to lose eligibility.
Assessors expect equipment costs to be:
Tools like GrantHub’s eligibility matcher can help you filter programs by province and industry in seconds, including whether capital expenses are typically supported.
While rules vary, equipment funding is most common in programs focused on:
Regional Economic Growth through Innovation (REGI) is one example where equipment may be eligible when it improves productivity or supports innovation-driven growth in Atlantic Canada.
Always check the program’s official guidelines or contribution agreement before committing funds.
Buying equipment before approval
Most grants only cover costs incurred after the approval date. Pre-purchases are usually ineligible.
Assuming all equipment qualifies
General-purpose items like office furniture or laptops may be excluded unless explicitly required for the project.
Missing documentation
Programs often require quotes, invoices, and proof of payment. Missing paperwork can delay or cancel reimbursement.
Using equipment outside the approved project
If equipment is used for unrelated activities, funding can be clawed back.
Q: Can I use grant money to buy used equipment?
Usually no. Most Canadian grants require equipment to be new and purchased at fair market value. Used or refurbished equipment is often excluded unless specifically stated.
Q: Are vehicles considered eligible capital purchases?
In most cases, no. Vehicles are typically excluded unless they are highly specialized and essential to the funded project.
Q: Do grants pay the full cost of equipment?
Rarely. Many programs fund only a portion of eligible costs, with the business covering the rest. The exact share depends on the program and project.
Q: Can equipment costs be claimed as a lump sum?
No. Grants usually reimburse actual expenses after you submit invoices and proof of payment, according to the contribution agreement.
Q: Are equipment grants taxable in Canada?
Grant funding may be considered taxable income, depending on how it is structured. Always confirm with your accountant.
Grant rules around equipment and capital purchases are precise, and they vary by program, region, and industry. GrantHub tracks 2,500+ active grant programs across Canada — check which ones match your business profile and see exactly what expenses are eligible before you apply. For more guidance, review program guidelines carefully or consult a funding advisor.
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