FedDev Ontario Opens AI Funding with Two Deadlines and Interest-Free Loans Up to $5M

What was announced

FedDev Ontario reopened the Regional Artificial Intelligence Initiative (RAII) for southern Ontario on October 13, 2026, following a federal announcement adding $500 million over five years to the national program. The funding is structured as an interest-free loan, not a grant, covering up to 50 percent of eligible project costs. Repayment typically begins one year after the project concludes, though the full repayment term has not been published by FedDev.

Two streams are available: AI Adoption for established companies integrating AI into their operations, and AI Commercialization and Scale-Up for companies building or scaling AI-driven products.

Who can apply

All applicants must be for-profit businesses incorporated and registered in Canada or Ontario, located and operating in southern Ontario when applying, or Indigenous-led businesses. They must own or be able to demonstrate ownership of the project's intellectual property and show commitment to responsible AI development.

AI Adoption stream applicants must have at least three years of operations, between 5 and 500 full-time equivalent employees, and a project using AI beyond commonly available tools. The AI Commercialization and Scale-Up stream requires at least one year of operations, a minimum of one FTE in southern Ontario with fewer than 500 total FTEs, and a solution at technology readiness level 6 or higher—meaning a prototype demonstrated in a relevant environment, not an early-stage concept.

• FedDev limits applicants to one open application at a time across all RAII and FedDev programs
• No published revenue threshold applies
• Priority sectors for adoption include healthcare, life sciences, energy, transportation, agriculture, and manufacturing

How the funding works

The contribution is fully repayable and interest-free, with repayment scheduled to begin approximately one year after project completion. Your 50 percent cost share must come from cash or committed financing; forecast revenue and in-kind contributions do not count toward your requirement. FedDev will confirm the final amount and you must sign a contribution agreement within 30 days of approval, confirming all matching funds with bank statements, term sheets, or conditional funding letters.

When combining RAII with other government assistance, total support is capped at 50 percent of eligible capital costs and 75 percent of eligible non-capital costs, or 100 percent for Indigenous-led projects. For companies claiming Scientific Research and Experimental Development (SR&ED) tax credits, costs should be excluded from the RAII application where possible to avoid duplication.

• Eligible costs are new, incremental costs directly related to the project
• Ineligible: land, buildings, vehicles, ongoing operating costs, debt refinancing, and application preparation fees
• Projects cannot start more than 12 months before your application date
• Any costs incurred before FedDev's formal decision are at your own risk

Key dates and how to apply

Two deadlines apply. Projects with eligible costs starting before March 31, 2027 must apply by November 24, 2026. All other projects have until January 19, 2027 at 4:59 p.m. Eastern time. RAII uses downloadable PDF forms rather than an online portal; applicants must complete the Application for Funding (For-Profit Applicants) and mandatory RAII Supplemental Form in Adobe Acrobat Reader and submit directly from the form.

Required documents include three years of financial statements for adoption projects (one year for commercialization), three to five-year financial projections, articles of incorporation, proof of your 50 percent funding commitment, a detailed work plan with milestones, biographies of key project staff, and evidence of IP strategy or accelerator support where applicable. Company officers must sign the application; consultants cannot fill authorized contact roles.

• Download forms from FedDev Ontario's official page
• Confirm the stream (Adoption or Commercialization) in question 22 of the application
• Keep the email acknowledgement recording your submission date and time
• For questions, call FedDev at 1-866-593-5505

What this means for your business

This program offers an alternative to grants for AI projects, giving established businesses and AI companies access to substantial capital without interest charges. The repayable structure means cash flow planning must account for loan repayment starting roughly one year after the project ends. The early November deadline creates urgency for businesses planning to invest in AI before March 31, 2027, while those with later timelines can use the January deadline.

The priority given to healthcare, life sciences, energy, transportation, and manufacturing sectors suggests FedDev views AI adoption in these areas as strategically important. Businesses should prepare vendor quotes, secure their 50 percent matching funds before applying, and clearly articulate how their project solves a specific operational problem (for adoption) or moves a prototype closer to market (for commercialization).