Application-based funding is a grant model where municipalities must submit proposals competing for limited provincial or federal infrastructure dollars. Rather than receiving automatic formula-based allocations, municipalities prepare applications describing their projects, demonstrating need, and showing how proposals meet program criteria. Successful applications receive funding while others are rejected. Critics argue this approach disadvantages smaller municipalities lacking staff capacity to prepare competitive applications, favours 'shovel-ready' projects over long-term planning, and creates uncertainty that hampers municipal budgeting. Supporters contend it ensures funding goes to the highest-priority projects with strongest justification.