Craig and David Nagy, Founder at eCommerce Canada, discuss the Canadian Digital Adoption Program (CDAP), a $4 billion government-funded initiative to promote digital innovation and transformation for small businesses in Canada. They delve into the application process, grant amounts, interest-free loans, and youth employment subsidies, highlighting the program’s potential impact on businesses and entrepreneurs.
A transcript of the conversation can be found below.
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Featured during this interview:
Craig Patterson 0:03
Welcome to the Retail Insider Video Interview series. I’m your host, Craig Patterson. And we’re joined here today with a special guest, David Nagy. He’s the founder of eCommerce Canada and is an entrepreneur and has done all kinds of great things. Welcome, David.
David Nagy 0:17
Mr. Patterson, super to see you. Great to join you again. It’s been a while since we’ve chatted. So it’s good to catch up with you and Retail Insider.
Craig Patterson 0:25
And we’re talking today about the Canadian Digital Adoption Program, which is basically free money for businesses to do things online. Can you tell us a little bit about what this is or what we could call it CDAP if you want as well for the abbreviation?
David Nagy 0:39
Affectionately, yes, we refer to it as “CDAP” or “The DAP” as some people call it once they get really familiar. So yes, it’s a $4 billion fund initiated by the government back in March 2022. Pretty great program. Canada Digital Adoption Program is designed to bring innovation and digital transformation opportunities to small businesses in the country.
Craig Patterson 1:04
Now, who can apply for it?
David Nagy 1:05
So it’s delivered in two stages, one of which I spend a lot of time on, the other one of which I’m just affectionate for, but don’t spend too much time on. Stage one is for smaller newer businesses, I think the requirements are to do about $30,000 in revenue and have at least one full-time equivalent employee that’s receiving a T4. It’s oriented towards e-commerce initiatives. So catalog-based websites that need things like eCommerce and folks at Digital Main Street, some of the nonprofits around the company could do a more eloquent job than I can of explaining how that side of the program works. But that’s stage one for micro-businesses.
David Nagy 1:41
Stage two is where people like myself, digital advisors, spend most of their time. That’s for more mature companies. You have to be doing a minimum of $500,000 worth of revenue in one of the three preceding tax years. So it must be reported revenue through your tax return. $500,000 is the bottom line, that’s the entry level, the ceiling is 100 million. So you have to be below 100 million. So it’s a pretty large slot size in there. Most Canadian businesses fall into that. So $500,000 to $100 million. You must be a privately held company (not publicly traded on a stock exchange). This is for independent business; you must have a majority of Canadian ownership. So you can have some foreign ownership, but the majority of the company must be held in Canada. And you must be a ‘for-profit’, not a ‘not-for-profit’.
David Nagy 2:31
Beyond that, just meeting the requirements of a Canadian corporation by and large covers the rest of the requirements. But everything’s available on the grant agency’s website in this case.
Craig Patterson 2:44
Now you’re involved in this as well, in terms of being one of the advisors. Tell us a little bit about what you’re doing with some businesses, including some retailers.
David Nagy 2:52
That got started on day one. You know, the backstory on that is like having something like this come along, I think, is a tremendous opportunity for someone who is in a consulting role. Going into this, I’ve worked with hundreds and hundreds of businesses prior to the Canada Digital Adoption Program. So when this was created, it certainly was an interesting and attractive opportunity. But I didn’t know that it would have such an impact on my life, right? And so I can say from firsthand experience just how inspiring it is, the opportunity to work with businesses at this level, to do a full top-down assessment of their businesses. I work specifically on the first phase of three pieces of value that a small business gets out of the CDAP program, or at least the CDAP stage two that we’re talking about.
David Nagy 3:42
The first is up to $15,000 in the form of a grant, which is designed to match up a digital advisor with a business. If your company applies and is accepted, you have the ability to choose a digital advisor to work with you, and the government will cover up to 90% with a maximum amount of $15,000 in the form of a grant that they’ll contribute to that engagement. The job of the digital advisor, someone like myself, is to put together a strategic roadmap that’s looking at every moving part of the business that we can, and how technology and digital innovation could have an impact on it, right? Let’s include things like IT infrastructure, software stack, sales, marketing, customer data, branding and positioning, market assessments, competitive assessment, cybersecurity, of course, even today, the influence of artificial intelligence in your business. All of these things should be part of the conversation and should be considered. We’re putting together a digital roadmap, right? The final output of that is what we call a CDAP plan, which is a series of recommendations, and kind of collaborating with the business owner to come to the best results of, like, conclusively here’s the business and benefits from it. Those things require a timeline, resource requirements, and a budget to be put forward; that plan needs to get submitted back to the government agency for their review. And if it’s approved, that’s when they release the portion of funding. So the advisor, of course, is invoicing and charging some money for these engagements. And the government will cover 90% of that invoice value to a maximum of $15,000. That’s a summary of the first phase, the first piece of stage two CDAP. It’s a required first phase. So you’re kind of like, you have to do that before you get access to the other pieces of value, right? And so that digital roadmap, the DAP, becomes the framework for the other pieces. There are two other great pieces of value that the digital advisors are using, not as involved in, but we’re opening the gateway to the next two pieces.
Craig Patterson 5:55
Now, David, there’s also a loan that I think the Business Development Canada is providing as part of this CDAP program. Can you tell us a little bit more about that as well, please?
David Nagy 6:03
Your business would qualify for up to $100,000 on an interest-free loan from BDC. Right. So that’s a five-year term on that. Businesses will get up to $50,000 or $100,000, depending on what their revenue is, the dividing line is $5 million in revenue. If you’re over 5 million, you can be accepted $100,000 of interest-free up to. If you’re under 5 million, you can receive up to $50,000 interest-free on a five-year term. Now that’s contingent on the plan. So the digital adoption plan kind of outlines like here’s what the use of the capital would be, this is how this money would be oriented. So it really comes down to how much is requested in there. It doesn’t have to be $50,000 or $100,000, just depending on the needs of the business.
Craig Patterson 6:53
And furthermore, I think there’s a grant involving the hiring of youth. Can you tell us a little bit more about that as well, please?
David Nagy 6:58
That’s a subsidy available for youth employment. So we’re really trying to create this next generation of digital natives, which is a pretty important part of this entire program. There’s a subsidy available for $7,300 to bring someone into your business for a minimum of 450 hours, but we would hope for long-term employment out of this. That is the goal, to bring people into businesses that are going to be valued long-term, right? And so these individuals can be either in post-secondary today or have graduated within the last two years. I believe they have to be under 30 as well, I think that’s one of the requirements. So what’s available there and it is on a 450-hour commitment, your business can be subsidized up to $7,300 on the salary that’s paid to them. So it’s pretty good coverage, that covers the majority of that salary over a 450-hour commitment.
David Nagy 7:55
So three super important pieces. And I would say that the last piece, that $7,300, it’s available. The projects coming out of the digital adoption plan can be mapped really, really nicely to the utilization of that person’s time, right? So there’s a lot of things that your digital advisor should come up with that should be pointing to that piece and saying, like, hey, this would be a really great use of capital if an individual was to come through the youth employment program and be matched up with those work units there.
Craig Patterson 8:29
David, there hasn’t been much of an uptick yet in terms of there’s a lot of money that’s still available for this grant. There has been $4 billion that’s been allocated. But what’s the percentage of that that’s been spoken for so far? And the reason I’m saying this is because we’re trying to push businesses to be part of this so that this program continues.
David Nagy 8:47
My understanding is, Craig, there’s a lot of visibility yet. So relatively low subscription. I can’t quote exact numbers because it’s a bit of a moving target. The last number that I heard was around 3,300 businesses. That was a few months ago. I think uptake has been a little bit quicker since then. But you can imagine that there’s still a long way to go in stage two, 70,000 businesses was the intended target, right, there’s still a lot of money in the chest, so to speak. And about two and a half years, a little bit more than two and a half years left in the program timeline. So we’re still very much interested in having new businesses and new applicants come through. There’s still a high demand and a high need for that. So by all means, if anybody’s watching this video and think that they might qualify, then apply, reach out to Retail Insider, reach out to me, and hopefully we can connect you with the right resources and get you through the application.
Craig Patterson 9:42
And we’re going to be working with you as well here at Retail Insider, so we’ll put your website and information in the show notes as well for eCommerce Canada, because you’re definitely, I think, the person to work with here for businesses, your company, in terms of the Canadian Digital Adoption Program and otherwise.
David Nagy 9:58
That’s very sweet, Craig. There’s a lot of good brainiacs out there. I don’t want to take all the credit for being a digital adviser. There’s a lot of good ones out there, I’m sure. But yes, we’re certainly interested in doing the work. And I would say, you know, as someone who’s been in 10 businesses myself, I’ve been through the wringer and rigors of entrepreneurship, so to speak, and had a few good businesses and a whole bunch that probably could have been doing better things with my time. But it really is a magical connection, right? This has been the highlight of my career to work with people of this level, this capacity, completely unexpected, I didn’t see this coming. But the way this program works and the opportunity that we have to kind of connect with one another, and it’s really a shared experience between an advisor and an entrepreneur, going through with a leadership team and the outcomes, you know, this work takes weeks when it’s done well, if it’s done right? It takes a long time to assemble something like this. So it is a pretty incredible outcome. Once we get to the end of it, and you know, I can say, with sincerity for myself, just the absolute highlight of my career having these experiences with business owners.
Craig Patterson 11:08
I know there’s business owners out there that are busy, this can be a bit of a process in terms of, you know, it’s an extra activity out there. But tell us a little bit about the timeline, how this works and the application process generally.
David Nagy 11:20
I think one of the primary areas of stress, the most business owners would have, myself included, we’re just so taxed today, we’re so busy today, and the hours mean so much. And any time we’re, you know, so to speak, off the floor, not working with our teams or not working with our clientele, you really gotta say that’s worthwhile. I would certainly vouch for this program, kind of start with the application process because that’s the primary concern a lot of small businesses, especially in the past few years, have been through the application process on something like a grant or loan or something like this, the CDAP has been structured well and they just did such a great job with the application process. And it can be some friction with it. But, you know, you’re filling out a survey format, a digital needs assessment, which is about 41 questions, it’s really easy to just get started and create an account and fill out a digital needs assessment. It should take somewhere between 10 to 20 minutes. It’s pretty well thought through, it’s pretty easy to go through, actually learn quite a bit, and it gets the, you know, the synapses firing on digital transformation to begin with. And so the final output is a scorecard and just an assessment and overview of your business. That’s kind of the first piece you have to complete, then you have to go through an identity verification process naturally with anything that is of this scale, $4 billion program, potential fraudulent activity is pervasive. Right? So there’s identity verification required to ensure that the director, the owner of the business is the one completing the application on the business’s behalf. Now, in time, I know there’s a shift coming up that’s going to allow that to be delegated out to a representative of the company as well. So that should reduce a little bit of the friction. But your company needs to be able to log in through either personal online banking to verify that identity or through the business’s CRA my business login. So the connection through the CRA account for the business is certainly one of the best ways to do this. Because we need to, you know, authenticate the credentials of the person who is applying on behalf of the business, once that’s done, which can go very, very quickly and easily, or it can take a little time if the business doesn’t currently have a way to do work and log in and verify that identity, you have to go through, you know, a snail mail code mail load from the CRA to create one of those accounts to ensure that you can still verify, and that can take a few weeks, right? So that can slow down the process just a little bit. Once all that’s done, there’s a little bit more rudimentary information that’s required about the business to complete the application. In certain cases, it’s almost an auto-approval that happens, and your business can be like approved the same day if the match-up to the CRA account happens and they can verify the revenue generation of the business and everything can be complete within 20 minutes, 15 to 20 minutes, the business could be complete. Or it could take a few weeks to get to the identity verification pieces. But regardless, this is amongst the simplest grant application processes that I’m that I’m familiar with. I think they’ve done a great job with the resource consumption on the applications, not that bad. Then the actual process itself, I think, differs by the digital advisor, probably the group who’s doing the work for you, probably largely dictates how much of the time commitment is required on the business side. I can speak from our experience that it’s a four to six-week process that will require you know, somewhere between five and 15 hours from the business, right? It depends very much on how much data they have access to, how much you can deliver, you know, online, through forums, through emails, things like that. So we really try, you know, even though it’s a very involved process, to minimize the day-to-day impact that it’s going to have on the company. Yeah, in our case, a lot of the work can be done somewhat independently as long as we can trade the data and talk over email, this stuff quite a bit. So it shouldn’t be considered, you know, too much of a risk from an hourly commitment perspective.
Craig Patterson 15:27
We’ve been talking about the Canadian Digital Adoption Program. We’ll have more information in our show notes. Thank you so much, David Nagy, for joining us today, you’re the founder of eCcommerce Canada.
David Nagy 15:36
Thank you, Craig. You’re the rock star of retail. So appreciate being here and having the opportunity to share this and look forward to hearing from hopefully and, you know, helping small businesses tap into this program’s pretty meaningful thing and I hope each and every one of you get an opportunity to take advantage of it .
Craig Patterson 15:56
Sounds like a wonderful program. I’m Craig Patterson. I’m the founder and publisher of Retail Insider Media. Thank you so much for watching us today or listening to us. If you’re on one of our podcast channels, be sure to subscribe, whatever platform you’d like to consume this on. Thank you so much. Take care and bye for now.
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