Are you running a business in Quebec or Canada?
Did you know there are exceptional financial resources that can accelerate your growth at every stage of your business development?
By following our guide, discover how to achieve the golden ratio of 25% equity versus 75% public funding to finance your projects.
Sounds too good to be true?
Trust our experience. We have ourselves benefited from these generous financial aids to strengthen our development, reduce our risks, improve our profitability, and increase our salaries. These same strategies that propelled our success are now within your reach.
Distinguishing Between Financing, Grants, and Tax Credits
To maximize your funding potential, it is fundamental to understand the three major families of financial aid at your disposal. Each has its unique specificities and advantages, and optimal businesses know how to combine them effectively:
1. Financing
Traditional financing involves capital contribution, generally repayable with interest or in exchange for a significant equity share in your business. This type of aid is costly and can include various types of investments: from venture capital to bank loans, through government financing (such as Investissement Québec, Essor, or Impulsion PME programs), not to mention private equity.
Main advantage: the predictability it brings to your cash flow/
Disadvantage: financing directly affects your balance sheet, borrowing capacity, or dilutes your equity in the company.
💡Tip: Before opting for financing, explore all available non-repayable, free money possibilities!
2. Grants and Non-Repayable Contributions
A grant is free financial aid given to you to achieve a specific objective. However, be aware: to obtain it, your project must meet strict criteria and often face intense competition with other businesses, following a contest format where the best are selected subjectively and opaquely. Grants are the most advantageous aids, but they require long and meticulous preparation, with no guarantee of success.
💡Tip: The grant landscape evolves rapidly. Rather dry these days, the situation could change. Stay alert for new opportunities!
3. Tax Credits
Tax credits are amounts you're entitled to if you meet the eligibility criteria. Here, unlike grants, there's no competition: if your business is eligible, you'll receive the credit without wasting time and resources in an uncertain competition. Programs like SR&ED, CDAE, multimedia titles, and C3i allow direct reimbursement in the form of a check or tax reduction.
👍Optimal Credits Preference: These credits are "guaranteed" as soon as you meet the conditions. Don't leave money on the table... claim everything you're entitled to!
The Complete Arsenal of Optimal Financing
An optimal financing strategy doesn't rely solely on sales and profit. It's also about properly aligning financial programs with each stage of your development. The goal? To compose a synergistic "mix and match" between the three types of aid – financing, grants, and tax credits – to make the best use of available resources.
Emphasize Your Differences
Available aid varies according to your profile: several programs are specifically intended for women entrepreneurs, marginalized communities, Indigenous peoples, farmers, cultural organizations, and non-profits, to name just a few groups. If you belong to one of these segments, you have access to additional aid that can give you a considerable advantage.
In the following guide, we present the generally most advantageous programs and how to combine them strategically. You'll see that our approach prioritizes tax credits for their reliability, judiciously integrating grants and complementary financing for optimal leverage.
Startup Phase: Take Advantage of Initial Resources at Lower Cost
The initial phase is challenging in terms of liquidity. There's no secret: you need seed capital to get the machine running. Unless you have deep pockets from the start, you'll find it difficult to escape financing.
Fortunately, several programs are specifically designed for young companies. The following list isn't exhaustive but gives you good starting points:
Financing
Offers loans accompanied by grants to Montreal SMEs.
Term Loans and Lines of Credit
For the first steps, a government-guaranteed loan can be an accessible solution, allowing initial financing at low cost.
Offers up to $75,000 in startup business financing.
This program offers either direct financing or a loan guarantee at reasonable rates, with broad eligible expenses and often accompanied by a grant.
Their program offers equity financing in the form of a competition. Good luck to those who take the plunge!
This loan can reach up to $100,000, but it's important to carefully evaluate interest costs before committing.
Investissement Québec Financing
Very flexible program covering up to 100% of your costs, including eligible tax credits – an excellent tool for bootstrapping your startup.
SADC+CAE Financing for Small Businesses and Young Entrepreneurs
Ideal for small businesses in regional areas, this program allows accessible financing to support local growth.
Grants
At this stage, grants mainly help you attract and compensate workforce. Although each is modest in size, you can combine several to maximize their impact:
In addition to financing certain costs, this program gives you access to one of countless incubators with support and services.
Covers 50% to 70% of intern salaries hired, ideal for strengthening your team without impacting your budget.
R&D program that supports collaborations with students, with funding up to $15,000 per hire.
Helps develop technological talent and allows claims of up to $7,000 per new hire.
Covers a portion of a young graduate's salary (15-30 years), ideal for strengthening your team without incurring heavy personnel costs.
To support technological innovation, this grant covers up to 80% of eligible labor costs. A must for innovative startups.
Tax Credits
Tax credits are particularly interesting for new businesses as they allow you to recover a significant portion of expenses incurred and thus recycle your precious capital. Here are some programs adapted to this phase:
Contrary to popular belief, SR&ED isn't reserved for large companies. On the contrary, young companies benefit from higher reimbursement rates, up to 73%, making it an ideal financial resource for startups. Contact Optimal Credits to maximize your claims!
Technology Transfer Tax Credit
If you develop projects in collaboration with a College Center for Technology Transfer (CCTT), this credit can reduce your costs.
Tax Credit for Intellectual Property Commercialization
An asset for innovative companies looking to promote and monetize their creations.
Tax Credit for External Design Activities
You can benefit from this credit if you work with design partners to develop innovative products or services.
Pre-Competitive Research Tax Credit
This program is intended for companies working in collaboration with other companies for advanced research projects.
There are hundreds of programs available at federal and provincial levels, each offering specific advantages according to sector and project type. To maximize their effectiveness, always keep in mind the golden financing ratio: 75% financial aid and 25% equity. And of course, don't hesitate to call on our experts to optimize your financing strategy and achieve your startup objectives.
Growth Phase: Optimizing Aid and Maximizing Expansion
This phase concerns businesses that already have a product, a solid team, and initial market traction – from startups to medium-sized companies in full expansion. At this stage, Optimal Credits maximizes the impact of available programs by combining various aid sources for powerful synergies.
Prioritize Refundable Tax Credits
SR&ED: The Pillar of Innovation
The Scientific Research and Experimental Development (SR&ED) program is a premier resource for innovative companies in Canada, allowing you to recover between 60% and 70% of your innovation investments. It's an obvious choice for companies off almost all sectors, which is why we made it our specialty at Optimal Credits.
Credit Components:
- Federal: up to 35% for SMEs
- Provincial (Quebec): add up to 30% additional
- Possible enhancement for Canadian-controlled private corporations
Eligible Expenses:
- Salaries: core of the program, including part-time management
- Subcontracting: 80% of amounts paid to eligible contractors
- Materials: consumed or transformed during experiments
Typically Eligible Activities:
- New product development
- Significant improvement of existing processes
- Prototyping and testing
- Innovative software development
CDAE (Tax Credit for the Development of E-Business)
This credit supports Quebec's information technology sector by offering a tax credit for eligible salaries. Modified in Budget 2024-2025, it is open to IT companies meeting certain criteria.
Credit Structure
- 30% of eligible salaries (24% refundable and 6% non-refundable)
- Annual maximum of $25,000 per employee (exclusion threshold of $18,056 to consider)
Covered Activities:
- Software development
- IT solution integration
- E-commerce services
Key Criteria:
- Minimum 6 eligible employees
- 75% of activities in the IT sector (NAICS Codes 541514, 541515, 513211, 513212, 561320 and 561330)
- Significant presence in Quebec
C3i (Investment and Innovation Tax Credit)
This credit stimulates the modernization of equipment and technological infrastructure. It's aimed at companies wanting to invest to increase their production capabilities.
Variable rates by zone:
- Remote zone: 40%
- Intermediate zone: 30%
- Central zone: 20%
Eligible Assets:
- Manufacturing and processing equipment
- Computer equipment
- Management software packages
Optimization Strategies:
- Geographic planning of investments
- Synchronization with equipment renewal cycles
Multimedia Titles Production Tax Credit
This refundable credit supports the digital entertainment industry in Quebec, with a base rate of 30% that can reach 37.5% for video game projects, educational platforms, and interactive applications. Even though the credit is set to decrease by 2028, it remains a must.
Main Features:
- Base refundable rate of 30%, with possible enhancement up to 37.5%
- Bilingual versions (French+English) eligible for additional enhancements
Eligible Productions:
- Video games
- Educational titles
- Training platforms
- Interactive applications
Effectively combining SR&ED, CDAE, C3I, and multimedia titles will radically transform your balance sheet and financial statements, by reducing your taxes payable or obtaining significant refunds. Add the strategic grants described below to achieve your golden financing ratio!
Strategic Grants: The Optimal Complement
NRC IRAP - The Most Complete Support
From our perspective, this is by far the best grant program. It's reserved for the most innovative companies, but if you're accepted, you'll be greatly rewarded.
Distinctive Advantages:
- Exceptional coverage rate (up to 80%)
- Expert technical support
- Network of specialized advisors
Funded Elements:
- R&D salaries
- Technical services
- Specialized equipment
Program entry is complex and limited. Recommended approach:
- Develop a long-term relationship with the advisor
- Present a multi-year innovation plan
- Demonstrate impact on competitiveness
Innovation Program: The Project Catalyst
Currently "ON HOLD" for the most popular "Volet 1", things could evolve in the coming months. "Volet 2" and "Volet 3" are still open, when a call for projects is issued by the governement.
Program Structure:
- Grant up to $350,000
- Non-repayable contribution
- Possibility of combining with other programs
Covered Phases:
- Planning
- Development
- Implementation
- Commercialization
Key Success Factors:
- Solid technical file
- Demonstrable economic impact
- Clear and measurable innovation
Synchronex - My Digital Success
Grant of up to $15,750 to develop technology in collaboration with Quebec's CCTT network. A powerful lever for feasibility analysis, simulation, concept development, specifications development, indicator tracking system installation, or laboratory research.
All projects involving digital transformation and targeting a concrete deliverable are eligible.
Complementary Financing: The Final Touch
A mix of loans and guarantees to finance clean technology investments or to integrate global supply chains. This program can cover up to 50% of eligible project costs, which is particularly advantageous for expansion projects. "Volet 1" is currently closed, but the other "Volets" are open and accepting projects.
Scale AI - The AI Supercluster
Intended for companies transforming the supply chain through AI, Scale AI finances up to 50% of eligible costs for projects such as industrial process optimization and predictive solution development.
Key Criteria:
- Supply chain transformation through AI with commercialization potential
- Must have measurable impact on productivity
- Project amounts: from $100,000 to several millions
- Must create qualified jobs and be carried out in collaboration with partners
The Business Case for Guaranteed Tax Credits
After years of supporting businesses of all sizes, our recommendation is clear: prioritize "guaranteed" tax credits before jumping into the race for grants. Here are the 3 fundamental reasons why this strategy is the most sensible for optimizing your resources.
1. Predictability: Plan Your Growth with Confidence
"Guaranteed" tax credits like SR&ED, CDAE, and C3i are based on well-established legislative eligibility criteria. Unlike grants, which are often subject to competitive and subjective selection criteria, tax credits guarantee a refund if you meet the conditions. Result: you can plan your finances with assurance, without risking wasting time in uncertain competitions.
The advantages at a glance:
- Clear and objective criteria: Eligible activities are defined by law and documented by jurisprudence.
- Proven and standardized procedures: Precise forms, fixed schedules, and transparent review processes.
- Reliable calculations: Mathematical formulas and fixed rates according to programs, ensuring precise amounts without surprises.
2. Efficiency: Optimize Your Time and Resources
Tax credits integrate directly into your operations, with continuous documentation requirements that reduce the intense one-time efforts that grants demand. Preparing a grant application can easily take you more than 100 hours, and include several back-and-forths and presentations – a considerable investment, especially if the application is refused, in which case you will have wasted your time. In contrast, the claim process for a tax credit integrates into your routine management and generates an almost assured return.
Effort comparison:
- Classic grant: 100+ hours of preparation, risk of refusal, multiple presentations.
- Tax credit: Regular documentation integrated into operations, almost guaranteed credit.
Tax Credits Offer Unbeatable Returns on Investment
Tax credits offer a higher ROI (return on investment) than grants. On average, the success rate for grant applications is around 25%, in the best cases, while tax credits are granted in more than 90% of cases for well-prepared applications. With tax credits, your efforts are directly rewarded, ensuring a return on your expenses without the opportunity cost of refusals.
Return Example:
- Grant: 25% chance of obtaining $100,000, or an expectation of $25,000. Although riskier, grants remain free money not to be neglected.
- SR&ED: 95% chance of obtaining $100,000, or an expectation of $95,000.
3. Sustainability: Build Your Future on Solid Foundations
Major tax credits have existed for decades, ensuring programmatic stability that businesses can benefit from in the long term. These credits enjoy broad support, with similar programs offered in all the most developed countries. You can therefore count on their lasting presence, supported by recurring budgets and the possibility of advance financing. This sustainability allows building a solid business strategy: hiring and training qualified personnel, investing in technology, and strengthening your processes, year after year.
Lasting Advantages:
- Systematic renewal of key programs, ensuring annual budgets and predictable tax planning.
- Benefits of an annual cycle: Recurring budget and possibility of advance credit financing, established relationships with Canada Revenue Agency verifiers
Unlock the Treasure with Strategic Tax Planning
There are two certainties in life: death and taxes. Your business is no exception. However, a complete analysis of the fiscal impact of financial aid can transform your net results and refine your strategic decisions. Let's explore the essential distinctions to maximize your gains.
The Case of SR&ED: you take the check or the credit?
Your choice to receive the SR&ED claim as a check or credit may seem trivial, but it has important tax implications. Here are the essential distinctions:
1. The "Check" Option: Watch Out for Pitfalls
With the check option, the amount received adds to your taxable income, creating a double tax effect. In addition to increasing your taxable income, it reduces future deductions.
Concrete Consequences:
- Increase in taxable income and reduction of your future deductions
- Potential impact on other income-based credits
- Effect on future installment payments
2. The "Credit" Option: Smart Optimization
If your business is already profitable, opting for the credit allows you to directly reduce your tax payable without increasing your taxable income. This choice also preserves your expense deductions, offering more advantageous tax planning.
Strategic Benefits:
- Stability of taxable income and maintenance of other tax advantages
- Optimization of cash flow and better predictability
Comparative Example:
For eligible SR&ED expenses of $100,000, let's consider both options:
- Check option: Credit received of $50,000, with a tax rate of 26.5%. The tax of $13,250 reduces the net benefit to $36,750.
- Credit option: Credit applied directly to taxes. Net benefit: $50,000, a difference of +$13,250.
In this case… it's a real no-brainer!
Fiscal Impact of Other Forms of Aid
1. Government Grants
Although valuable, grants are taxable in the year received and can affect eligibility for other programs or credits.
Optimization Strategies:
- Plan receipt and, if possible, spread it over several fiscal years to limit the impact
- Synchronize receipt with major investments to offset taxable income with deductible expenses
2. Traditional Financing
Interest is tax-deductible, and financing doesn't impact taxable income, although it does modify the debt ratio.
Possible Optimizations:
- Structure payments and choose financing timing based on other aid to minimize costs
3. Other Tax Credits
- CDAE: Includes a refundable portion of 24% and non-refundable portion of 6%. Pay attention to the impact on deductible salaries and consider the carry-forward option.
- C3i: This credit varies by region and affects asset depreciation, requiring careful planning of acquisitions.
Comparative Table of Fiscal Impacts
Strategic Recommendations
- Integrated Tax Planning
- Conduct annual evaluation of options in collaboration with your tax specialist and Optimal Credits
- Adopt a long-term view of financial impacts for more robust decisions
- Timing Optimization
- Synchronize aid with your fiscal year, and consider legislative changes to anticipate your cash flow needs
- Rigorous Documentation
- Maintain detailed tracking of fiscal impact, keep all supporting documents, and prepare for audits. We're here to help you see clearly!
What About the Other Popular Programs?
At this point, you might be wondering why we haven't discussed certain popular programs you've heard about. The answer is simple and straightforward: many of these programs are currently suspended or closed, with no confirmed reopening dates.
Notable Programs Currently Unavailable
While these programs have historically been important sources of funding, they are currently not accepting new applications:
- CanExport: Previously offering important sums for international market development
- PSCE (Programme de soutien à la commercialisation et à l'exportation): Former key program for Quebec exporters. Same fate as CanExport.
- Programme Innovation Volet 1 : Once a cornerstone of Quebec's innovation funding, closed.
- Impulsion PME: Previously providing significant support for SME development, closed mid-November 2024.
- Among others…
Why We Focus on Active Programs Only
We deliberately chose to focus this guide on currently available funding sources for two key reasons:
- Immediate Value: Our recommendations need to be actionable today
- Resource Optimization: Planning around inactive programs could mean missing out on available opportunities
Our Recommendation
Instead of waiting for these programs to potentially return, we encourage businesses to:
- Focus on "guaranteed" tax credits that are consistently available
- Take advantage of currently active programs
- Build a flexible funding strategy that can adapt to program availability
💡 Pro Tip: Stay connected with Optimal Credits for updates on program reopenings, but don't let your business growth depend on currently unavailable funding sources.
Follow the Path to Financial Optimization
Your Now Have a Roadmap to Success
Throughout this guide, we've explored how successful Quebec and Canadian companies leverage financial aid to accelerate their growth:
- The golden ratio of 75% financial aid to 25% equity provides optimal leverage
- "Guaranteed" tax credits offer the most reliable and predictable returns
- Strategic combinations of SR&ED, CDAE, and C3i can transform your balance sheet
- Smart timing and planning of grants and investments maximizes tax benefits
- Documentation and compliance are key to successful claims
The Cost of Waiting
Every month that passes without optimizing your financial aid means real money left on the table:
- Tax Credits: Up to 73% of eligible R&D expenses unclaimed
- Grants: Missed application deadlines for non-repayable funding
- Strategic Planning: Lost opportunities for tax-efficient investment timing
- Cash Flow: Suboptimal use of available government resources
💡 Quick Calculation: A company spending $500,000 annually on innovation could be missing out on over $350,000 in government aid by not optimizing their claims!
Start Your Action Plan Now
- Immediate Steps
- Schedule your free diagnostic session with us
- Review your current R&D and innovation activities
- Gather documentation for potential claims
- Short-Term Optimization (Next 90 Days)
- Assess eligibility for key tax credits
- Identify upcoming grant opportunities
- Align investment planning with aid programs
- Long-Term Strategy
- Develop a comprehensive funding strategy
- Implement robust documentation systems
- Build relationships with key program administrators
Why Partner with Optimal Credits?
- Expertise: Deep understanding of complex aid programs
- Track Record: Proven success in maximizing client returns
- Holistic Approach: Strategic integration of all available programs
- Ongoing Support: Continuous optimization of your funding strategy
Take the First Step Today!
Don't let another dollar slip through the cracks. Our team of experts is ready to transform your business into a financial optimization powerhouse.
📞 Contact Us:
- Phone: 514-814-8391
- Email: info@optimalcredits.com
- Website: www.optimalcredits.com
Book your free consultation today and discover how much additional funding your business could access.
Optimal Credits: Your partner in transforming potential into prosperity.
