Ottawa fronts half your AI agent project: what the RAII changes for Quebec SMBs

On June 4, 2026, Ottawa launched its national strategy, "AI for All", with more than $2.3 billion in new spending. The headlines went to the big numbers. But for a Quebec SMB considering a custom AI agent, the most concrete measure went almost unnoticed: the Regional Artificial Intelligence Initiative (RAII), delivered in Quebec by Canada Economic Development (CED), was extended to 2031 and its national envelope received an extra $500 million.

In plain terms: CED can front up to half the cost of your AI project, interest-free. Not in some upcoming program. In a program accepting applications today.

This article explains how the RAII works, what it funds, and the design detail most business owners miss, the one that determines whether your expenses count at all.

The short answer, for the busy

Two federal programs can finance an AI agent project in a Quebec SMB in 2026. The first, the Regional Artificial Intelligence Initiative (RAII), is delivered by Canada Economic Development for Quebec Regions. It offers an interest-free repayable contribution covering up to 50% of authorized costs for an AI adoption or development project: diagnostics, solution design, implementation, and knowledge transfer. Non-profit organizations can receive up to 90% of costs, and that support is generally non-repayable. The program runs until March 31, 2031, and only costs incurred after the application is submitted are eligible. The second, BDC's LIFT program, targets businesses with more than $1 million in annual revenue: loans from $25,000 to $2 million for software AI projects, at a rate aligned with the Bank of Canada's policy rate (2.25% at launch), with expert advisory support included.

What the RAII is, and what it isn't

Let's clear up the most common misunderstanding first. The RAII is not a grant. For a business, it is an interest-free repayable contribution: you pay back the principal, but you never pay interest on it. In other words, a 0% loan on half your project.

You could be disappointed. That would be misreading the offer. With commercial rates still sitting well above zero, 0% financing over several years has real value, especially for a project whose benefits arrive gradually. And the repayable structure has a selection effect worth noticing: the program attracts projects the business believes are profitable enough to pay for themselves. That is exactly the test an AI project should pass anyway. If your AI agent doesn't generate enough value to repay half its own cost, financing is not your problem.

For non-profits, the logic differs: up to 90% of authorized costs, generally non-repayable.

The program has existed since fall 2024, but two things changed on June 4: the deadline moved from 2029 to March 31, 2031, and the national envelope grew by $500 million as part of the new federal strategy. The government's stated target gives a sense of the ambition: moving business AI adoption in Canada from roughly 12% today to 60% by 2034.

The detail that changes everything: the submission date

Here is the most important sentence on the program's official page, and it fits on one line: costs are eligible from the date the application is submitted.

Read it again. If you start your AI project in July and file your application in September, everything you spent in between doesn't count. The natural entrepreneurial reflex, start small, validate, then look for funding, is precisely the behaviour this program does not reward.

The rule has its logic: the government wants to fund projects that would not have happened without it, not reimburse decisions already made. Public servants call this incrementality. For you, the practical consequence is simple: the application must precede the first invoice. The right sequence is to define the project, file, then start. Filing an application commits you to nothing; failing to file in time costs you half the project.

What the program funds

The RAII rests on two pillars. The first supports businesses that develop or commercialize AI technologies. The second, the one that concerns most SMBs, funds the adoption and integration of AI into operations.

For the adoption pillar, eligible expenses cover the full cycle of a project: the diagnostic (identifying where AI creates value in your processes), solution design, implementation, and knowledge transfer to your team. If you have read our article on what an AI agent costs for a Quebec SMB, you will recognize the structure: these are exactly the cost categories of a custom agent project, from the first workshop to production.

One useful clarification: bringing in an external provider to design and implement the solution is part of the intended model. The program does not assume your SMB will hire an in-house AI team. It funds the project, whoever delivers it, as long as costs are documented and authorized.

How Ottawa picks: the prioritization criteria

The envelope is not infinite, and CED publishes its prioritization criteria. Four kinds of projects move to the front of the line: projects submitted by SMBs, projects that include cybersecurity measures, projects that encourage participation from underrepresented socio-economic groups, and projects that support the transition to sustainable practices.

The second criterion deserves a pause. If you have followed our series on Law 25 obligations for Quebec SMBs deploying AI agents, you already know data governance is not optional in Quebec: safeguarding personal information, assessing transfers outside the province, keeping automated decisions traceable. That same compliance work, presented as cybersecurity and data protection measures in your application, becomes a prioritization argument. Law 25 compliance and a RAII file reinforce each other: an agent designed with guardrails from day one checks both boxes at once.

CED also explicitly encourages responsible AI and points to the federal government's Voluntary Code of Conduct on generative AI and the Montréal Declaration. A project that engages with these seriously speaks the evaluator's language.

If your SMB clears a million in revenue: BDC LIFT

The RAII is not the only vehicle. Since April 2026, the Business Development Bank of Canada offers the LIFT program: loans from $25,000 to $2 million for software AI projects (up to $5 million when the project involves equipment), at a rate aligned with the Bank of Canada's policy rate, 2.25% at launch, with up to two years of principal deferral and support from AI advisors. The entry condition: more than $1 million in annual revenue, and a project with at least one Canadian component.

The two programs answer different situations: the RAII finances a specific project on shared costs, LIFT finances broader capacity to invest. For a mid-sized SMB, the real question is sequence: which project, financed how, in what order.

Where to start

The logical sequence has three steps. First, define a specific project: which task, which process, which measurable outcome. A RAII file is built around a defined project, not a general intention to "explore AI". Second, validate eligibility with a CED advisor in your region, before committing a single dollar. Third, file the application, and only then, start.

That is exactly the kind of scoping we do in a first conversation: identify the task that justifies an agent, estimate the real cost, and structure the project so it is both profitable and fundable. 30 minutes, no commitment.

→ First conversation, no commitment

This article explains a public funding program to help an SMB ask the right questions; it is not financial or legal advice. The exact terms of the RAII (authorized costs, repayment conditions, eligibility) are determined by CED case by case: validate your situation with a CED advisor before any decision. The official program page on canada.ca prevails.