Canada Digital Adoption Program (CDAP) Review: Is It Worth It?

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Canada Digital Adoption Program (CDAP) Review Rating: 3/5

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Data from Statistics Canada confirmed that retail e-commerce activities increased significantly during the pandemic.

This is not surprising as e-commerce provides consumers with optimal convenience, easiness and greater shopping accessibility compared to traditional stores.

Today, e-commerce continues to grow as many consumers look to save time and costs on shopping.

It’s on this background that the federal government launched the Canada Digital Adoption Program (CDAP) to help small and medium-sized businesses expand their operations to the online world.

The program provides grants and loans to help you adopt digital technologies to realize your full business potential.

Whether you already have an online presence or don’t have the resources or knowledge to implement new technology, CDAP has something for you.

The fundamental question is, is CDAP worthwhile for your business? 

In this Canada Digital Adoption Program review, I provide everything you need to know to determine if the program is suitable for your business or not.

What is the Canada Digital Adoption Program (CDAP)?

Canada Digital Adoption Program (CDAP) is a financial assistance program that was established by the federal government in 2021 to help small and medium-sized enterprises (SMEs) offset the cost of upgrading or adopting digital technologies to realize their full potential.

The program has two streams — Grow Your Business Online (grant-based) and Boost Your Business Technology (loan-based).

Depending on the needs and peculiarities of your business, you can apply for either or both of the streams.

The 2021 federal budget allocated $4 billion to the program with the loan stream accounting for $2.6 billion and the grant stream accounting for $1.4 billion.

A total of 160,000 Canadian SMEs are expected to benefit from the program with a total of 90,000 beneficiaries on the grant component and 70,000 beneficiaries on the loan component of the program.

CDAP is regulated by Innovation, Science and Economic Development Canada (ISED) and the loans are disbursed by the Business Development Bank of Canada (BDC).

Is CDAP Legit? 

Absolutely! The CDAP (Canada Digital Adoption Program) is a legit program sponsored and managed by the federal government.

One of the major reasons some people think CDAP is fake or scam has to do with the unprofessional way some of the digital advisors used to advertise the program to businesses.

Digital advisors are authorized to design your digital plan through which you will access the loan component of the program.

However, some of the advisors adopt a cold method of reaching out to businesses and persuading them to enroll in the program. 

You may receive an unsolicited call or email from them in the same manner as you would from scammers.

That’s not to say that everyone who contacted you about the program is an approved digital advisor. Scammers may disguise themselves as such. 

So you need to be very careful who you communicate with. You can find approved advisors under the CDAP portal. More on this below.

How Does Canada Digital Adoption Program Work? 

As noted earlier, CDAP comprises loan and grant-based streams. Each of the streams works differently. 

Below I will explain how each of them works. I reserved their eligibility until we reached the CDAP eligibility section.

CDAP Stream 1: Grow Your Business Online Grant

This is a micro-grant that seeks to help smaller retail businesses grow their businesses online by offsetting the cost of adopting e-commerce technologies. 

The Grow Your Business Online stream provides a $2,400 micro-grant to eligible small businesses including for-profit, social enterprises and co-operatives with less than $500,000 annual revenue.

A total of $1.4 billion is budgeted for this stream which will benefit up to 90,000 businesses. 

The grant seeks to help you cover the following eligible costs: 

• Developing a new e-commerce website or adding functionality to your existing website such as online ordering systems, booking tools and electronic payments.
• Installation of an e-commerce platform.
• Hiring a consultant to develop a digital marketing strategy for your e-commerce store.
• Tracking and managing inventory and sales through e-commerce software.
• 20% coverage on the total cost of hardware and software.

CDAP Stream 2: Boost Your Business Technology Grant

This stream provides both a grant and loan to help you post your business operations online.

The grant component is offered by ISED to help you offset the cost of developing a digital plan with a digital advisor.

ISED offers up to 90% of the fees, up to the maximum grant value of $15,000 to be paid as fees to your digital advisor.

So if your digital advisor charges you over $15,000 for developing a digital plan, the government will pay the advisor $15,000 and you will pay the rest including taxes. 

When your advisor is done creating your digital plan, you will have access to interest-free loans up to $100k at BDC to implement the plan.  

Other benefits you will get after creating a digital plan include up to $7,300 wage subsidy to hire a talented youth to help implement your digital plan. More details below.

Stream 2 Additional Benefits

Here I explain in detail the additional benefits you will get under Stream 2:

1. Digital Needs Assessment (DNA)

As part of the application process, you will be required to take a questionnaire to assess your business’s digital needs to identify how you can boost your e-commerce store.

After taking the questionnaire, you will get a customized report showing what others are doing in your industry and ways you can boost your business online. 

This will form the basis of creating your digital plan with your chosen digital advisor.

2. BDC Interest-Free Loan

As noted earlier, you will get up to a $100k zero-interest loan from the Business Development Bank of Canada (BDC) to implement your digital plan.

However, creating a digital plan is not a guarantee that you will get the loan. You must meet BDC’s eligibility criteria and creditworthiness requirement to qualify for the loan. Even at that, there’s no guarantee of approval.

The amount of loan you will get from the BDC depends on your business revenue. If you have:

• $500,000 to $5 million business revenue= $25,000 and $50,000 loan
• $5+ million business revenue in one of the last three years = $25,000 and $100,000 loan

You can apply for the loan for multiple businesses but the total amount is $200,000 per borrowing group. 

Below are the eligible items you can use the BDC loan on: 

• Installation of new technologies
• Acquiring IT equipment
• Increasing and/or updating IT equipment
• Training staff on onboarded technologies
• Materials and support services directly related to onboarding the technology
• Subsequent advisory services on your digital adoption plan

The BDC loan has a 5-year term with a 12-month capital postponement, amounting to a total of a 6-year term. There are no fees involved.

However, you have to apply for the loan within six months of your digital plan approval by ISED else you will be ineligible for the loan. 

But if you apply through a fast-track option, a System Selection plan or another recognized government program, then you have 30 days to apply for the loan after approval.

Finally, you must be willing to attest that you will use the loan to implement your digital adoption plan to qualify for it. 

Visit the BDC website to learn more.

3. Funded Work Placement

The Boost Your Business Technology Grant also provides you access to a $7,300 wage subsidy to hire skilled youth who can help implement your digital adoption plan. 

The more youth you need to hire, the more you can apply for the wage subsidy.

This subsidy is administered by Magnet, a digital community workforce system that helps your business connect you with the right talent.

To qualify for the wage subsidy, you must have completed a digital adoption plan and received your grant under CDAP or submitted the plan to CDAP if you applied under another recognized government program.

Visit Magnet’s website to learn more.

4. Fast-Track for Businesses with a Digital Adoption Plan

Businesses that already have a digital adoption plan can still benefit from CDAP. 

With the fast-track option, you can get access to BDC’s zero-interest loan of up to $100k and funded work placement to implement your digital plan.

To be eligible for this option, you must create a digital plan in the last 24 months under any of the following programs: 

• BDC Advisory Services
• Atlantic Canada Opportunities Agency: Digital Acceleration Pilot
• Digital Boost 2.0 (New Brunswick)
• Digital Acceleration Fund (Prince Edward Island)
• Digitalization Competence Center (DCC)
• Programme Audit Industrie 4.0 / ESSOR – Volet 1B (Québec)
• National Research Council of Canada Industrial Research Assistance Program (NRC IRAP)

However, to use multiple funding programs to reduce the cost of your digital adoption plan, you must:

• Meet the eligibility of each program
• Work with an advisor that’s recognized by both program

Note that the total of the combined grants can’t be more than the invoice of your advisor.

For more information, contact ISED. 

Canadian Digital Adoption Program Eligibility 

CDAP Eligibility varies depending on which stream of the program you’re looking to apply.

If you’re unsure which of the two streams is right for your business, you can use the CDAP grant assessment tool to get a perfect recommendation. 

The general eligibility is that your business must have an e-commerce presence to be able to seek funds for digital marketing.

Below I shall discuss the specific requirements for each of the streams.

Grow Your Business Online Grant Eligibility 

To qualify for the $2,400 micro-grant under this stream, your business must be: 

• Registered or incorporated (if not, use Ownr to register or incorporate online to save cost and time) 
• For-profit or social enterprise or co-operative
• Retail (consumer-facing)
• Have a minimum of one employee (excluding the owner) or have a minimum of $30k annual revenue in the recent tax year 
• Be willing to maintain a digital adoption strategy for six months 
• Agree to participate in ongoing surveys, share your experience and have your name published as a grant recipient.

Boost Your Business Technology Grant Eligibility 

This grant-loan stream has many eligibility criteria. 

First, you must be the owner or director of the business or be authorized by the director to apply.

Secondly, your business must: 

• Be a Canadian-owned
• Be for-profit and privately-owned
• Have 1 to 499 full-time equivalent employees
• Have had at least $500k in annual revenue in one of the last three years  

These are the major requirements. You can learn more about other Stream 2 eligibility criteria here.

Canada Digital Adoption Program Application Process 

The application process varies between the two streams of CDAP.

However, you can apply for both streams so long as you meet their eligibility criteria.

Below I provide a step-by-step guide on how to apply for CDAP: 

Step 1: Know your stream 

The first step is to identify which of the streams is suitable for your business. 

If you’re still unsure, use the CDAP grant assessment tool to get a perfect recommendation. 

Step 2: Connect with a local service provider or digital advisor

If you’re applying for the Stream 1 micro-grant, you will be directed to a service provider in your province who will help you apply for the grant.

But if you’re applying for the Stream 2 grant, you will need to take a Digital Needs Assessment (DNA) to determine your business’s unique solutions.

After that, you will be required to connect with a digital advisor by selecting from the pool of options on the CDAP’s Digital Advisor Marketplace. 

Your digital advisor will create your digital plan to help you access the BDC interest-free loan. 

The cost of creating the digital plan is covered by the maximum grant value of $15,000. If the cost exceeds the grant limit, you will cover the rest including applicable taxes. 

As a result, you should partner with a low-cost digital advisor who can help you meet your business’s digital needs. 

Key factors to consider when choosing an advisor include: 

• Industry 
• Area of expertise
• Language 
• Location
• Portfolio 
• Pricing
• Terms
• Customer reviews

Ensure your advisor doesn’t charge a fee for application rejection.  

Also, avoid an advisor who promises to split the grant amount with you. The grant is meant for advisory fees. So they may put themselves and you in trouble if they split the grant amount with you. 

The government runs regular audits to ensure you comply with the terms and conditions of the program.

The government will not be involved in the agreement between you and your digital advisor. But you’re advised to include the following items in your agreement: 

• Your legal business name and that of your digital advisor
• Scope of work
• Costs of creating the digital plan
• A mention that the digital advisor will create an adoption plan according to the CDAP digital adoption plan guide.

While your digital advisor is responsible for creating the digital plan, you can contribute by working with them. 

Express yourself, discuss with them, and ask questions to help them create a plan that best suits your business.

Step 3: Get your grant

If you submit your application and meet the eligibility of CDAP, you may be fortunate to get a grant according to the stream you applied for. 

For Stream 1, you can proceed with the $2,400 micro-grant to cover the eligible expenses we discussed earlier. 

If you get the grant under Stream 2, it is coverage for the advisory cost of creating your digital plan. 

However, the grant opens doors for a BDC interest-free loan and wage subsidies that you can apply multiple times.  

Remember, you have to apply for the loan within six months of ISED approval to avoid disqualification.

If you applied through a fast-track option, a System Selection plan or another recognized government program, you must apply within 30 days of approval or get disqualified. 

Canada Digital Adoption Program Deadline 

CDAP is scheduled to run for four years, with the deadline falling in 2025. However, the program is based on first come, first served. Application will closed whenever the target limit is reached.

The program has an investment limit of $4 billion and it targets 160,000 businesses. We’re not sure if these limits will be extended after reaching the initial target.

Additionally, the loan component has an accessibility deadline depending on the application method.

• If you applied through CDAP, you must apply for the loan within six months of your digital plan approval to get the loan.
• If you applied through a fast-track option, a System Selection plan or another recognized government program, you must apply for the loan within 30 days of approval to get it. 

Pros and Cons of CDAP 

From the above review of the Canada Digital Adoption Program, we can identify the following pros and cons:

Pros

Free money: The government provides grants and wage subsidies through CDAP to help you scale up your e-commerce store.
Interest-free loans: With up to $100k interest-free loans repayable within 6 years, the government reduces the burden of funding your e-commerce store. 
Job creation: CDAP has a multiplier effect of supporting job creation across the country.  

Cons 

Limited amount for small businesses: The micro-grant under Stream 1 which is more accessible to small businesses has a limited grant amount of $2,400. Considering the costs of developing and maintaining a standard e-commerce store, this amount may not move the needle for many businesses. 
Partial advisory fee: The 90% advisory fee coverage under Stream 2 means that you will cover the remaining 10% should the fees exceed $15,000. Paying up to $15,000 as an advisory fee implies that digital advisors have more to benefit from the program than most small businesses.
High revenue requirements: The business revenue requirement for a loan starts at $500,000. This undermines the goal of the program to assist small businesses as not many small businesses generate that level of revenue in a year.  
No guarantee of approval: There’s no guarantee of approval even if you meet the eligibility and submit a complete application. 

Canada Digital Adoption Program Review Rating Methodology

I rate the Canada Digital Adoption Program 3 out of 5 stars based on a comparative analysis of other programs and the rating of the following features: 

Based on the above rating, CDAP appears to be more suitable for: 

• New small businesses with limited digital needs
• Existing SMEs looking to upgrade their e-commerce stores 
• SMEs with complex digital needs that can benefit from $15k worth of advisory services.

Verdict on Canada Digital Adoption Program Reviews

The CDAP program is a response to the prevailing consumer behaviour.

As the number of online shoppers keeps increasing by the day, CDAP seeks to help you position your business in the right direction.

Despite the good intentions of the program, it has several drawbacks that make it unsuitable to many businesses.

If CDAP is suitable for your business, you can’t go wrong with it. 

Either way, ensure you weigh the pros and cons of the program before finalizing your decision. 

I wish you and your business all the best!