Southern Ontario businesses can apply for up to $5M in AI funding

What was announced

FedDev Ontario has reopened the Regional Artificial Intelligence Initiative in southern Ontario with substantially increased funding. The program is part of AI for All, Canada's National Artificial Intelligence Strategy. The federal government allocated an additional $500 million over five years to the initiative, bringing total national funding to $700 million. Delivery is managed by regional development agencies; businesses in other regions of Canada apply through their own agencies under different terms.

How the funding works

The contribution is fully repayable with no interest. FedDev Ontario covers up to 50 per cent of eligible project costs; your business must cover at least 50 per cent. Repayment normally begins one year after the project is completed. The minimum funding per project is $125,000, which means eligible costs must total at least $250,000 to qualify at the maximum government share.

Eligible costs support work that goes beyond purchasing commonly available AI tools. For adoption projects, this includes readiness assessments, acquiring and integrating AI solutions such as predictive analytics or robotics, upgrading equipment and digital infrastructure, reengineering processes, and improving data quality and governance. Training, cybersecurity, change management and building internal AI expertise can also count, provided they do not duplicate other government support.

• Land and building purchases are not eligible
• Refinancing existing debt is not eligible
• Costs tied to preparing your application are not eligible

Who can apply

Two distinct streams serve different business models. The AI Adoption stream is for established businesses integrating AI into their own operations to improve productivity, competitiveness, growth and resilience. Applicants must have at least three years of business operations (demonstrated in financial statements), at least five full-time equivalent employees, and fewer than 500 employees overall.

The AI Commercialization and Scale-Up stream targets businesses selling AI products rather than adopting them. It supports validation, commercialization, deployment and scaling of Canadian-made AI products and services. The eligibility bar is lower: applicants need at least one year of operations and at least one full-time equivalent employee in southern Ontario, but still must have fewer than 500 employees overall.

Both streams require the same core conditions: your business must be located and operating in southern Ontario at the time of application, be incorporated and registered to do business in Canada or Ontario, own or demonstrate that you will own the project intellectual property, and show commitment to responsible AI development and use, including appropriate cybersecurity, human oversight and accountability.

Priority sectors and applicants

Adoption projects may receive priority if they are in healthcare and life sciences, energy and natural resources, transportation, agriculture, or manufacturing and robotics. Commercialization projects may receive priority if applicants can demonstrate market traction (such as sales, export potential or patent filings) or past support from the innovation ecosystem (angel or venture investment, or participation in an accelerator or incubator).

Across both streams, priority may also go to projects that widen access to AI skills and jobs for youth, Indigenous peoples and other underrepresented groups, and projects that retain Canadian expertise, supply chains and intellectual property in Canada.

Key dates and eligibility rules

The application period opened October 13, 2026. Applicants planning to start their project or incur eligible costs before March 31, 2027 must apply by November 24, 2026. The final application deadline is January 19, 2027 at 4:59 p.m. Eastern. All projects must be completed no later than March 31, 2031.

Projects may not begin more than 12 months before the date of application. Once approved, businesses must sign a contribution agreement within 30 days, and will need to confirm all sources of matching funding with supporting documentation such as bank statements, term sheets or conditional funding letters. Applicants should exclude SR&ED tax credit-eligible costs from their application where possible, as stacking rules apply and double-counting costs can jeopardize an application.