Canada expands AI funding to C$700 million through regional agencies

What was announced

Canada has added C$500 million over five years to the Regional Artificial Intelligence Initiative, bringing total RAII funding to C$700 million. The expansion was announced on October 13, 2026, and is designed to support three distinct streams of AI-related work rather than function as a single national grant program. The federal government will distribute the money through seven regional development agencies, each responsible for its own area: ACOA, Canada Economic Development for Quebec Regions, CanNor, FedNor, FedDev Ontario, PrairiesCan, and PacifiCan.

• Adoption: helping SMEs and eligible non-profits integrate AI into existing operations
• Commercialization: helping Canadian AI companies validate, deploy and scale products or services
• Ecosystem support: funding regional organizations that connect businesses with technical, advisory and market expertise

Why now: the adoption gap

Statistics Canada's second-quarter 2026 survey found that 19.2 per cent of businesses reported using AI in the preceding 12 months, up from 12.2 per cent in Q2 2025. However, adoption varies significantly by geography and sector. Urban businesses reported use at 21 per cent compared with 9.9 per cent in rural areas. Information and cultural industries led at 42.3 per cent, while agriculture, forestry, fishing and hunting reported only 4.5 per cent. The government has identified priority sectors including agriculture, health, energy, transport, manufacturing, and robotics as targets for the expansion. Since 2024, the program reports 218 projects, more than 1,100 jobs created or maintained, and approximately C$1.77 leveraged in other funding for each federal dollar approved.

Regional terms differ—check your agency first

Because the program is delivered regionally, eligibility, funding amounts, repayment terms, and deadlines vary by location. Businesses must apply through their regional development agency and cannot assume national rules apply. In Atlantic Canada, the Atlantic Canada Opportunities Agency is offering nearly C$40 million of the new national amount for eligible SMEs with AI projects valued at C$1 million or more, with submissions closing November 20, 2026. In southern Ontario, FedDev Ontario opened intake on October 13, 2026, with a final deadline of January 19, 2027 for submissions; projects with eligible costs before March 31, 2027, must be submitted by November 24, 2026. For-profit businesses in southern Ontario can seek between C$125,000 and C$5 million in fully repayable, interest-free funding, with a maximum 50 per cent cost share and repayment normally beginning one year after project completion. The federal government has cautioned that applicants should not assume one national calendar or set of terms applies everywhere.

• Confirm the local intake date, applicant criteria and eligible project stream with your regional agency
• Verify whether support is repayable, what share your business must fund, and which costs qualify
• Define measurable operational or commercialization outcomes rather than treating tool installation as proof of productivity

Do not confuse RAII with BDC's LIFT

A separate C$500 million AI funding program exists through the Business Development Bank of Canada. BDC launched LIFT in April 2026 as a combined financing and advisory service for technology adoption. LIFT's AI and digital-transformation track is for Canadian businesses with at least C$1 million in annual revenue and requires a BDC Advisory Services plan. RAII is delivered through regional development agencies and covers adoption, commercialization, and ecosystem support, while LIFT is a BDC financing-and-advice offer. Neither program pays money automatically upon announcement, and eligibility in one does not establish eligibility in the other.

What businesses should do next

Owners and non-profit leaders should first identify which regional development agency serves their location, then visit that agency's official program page to confirm current intake dates, project eligibility criteria, and whether funding is repayable or a grant. Budget the full project cost, including the portion the business must contribute, and establish a clear baseline and measurable outcome the project will deliver. The new RAII money is spread over five years and is not an automatic payment to every applicant.