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Quebec Small Business Loans Guide

Searching for a loan that meets your specific business objectives can be a time-consuming endeavour. Sifting through a multitude of sites, each with hundreds of pages worth of information that doesn’t always apply to you is no one's cup of tea. That’s why we put together this comprehensive small business loans guide for Quebec business owners and entrepreneurs, to help you find the right lender. 

Here you will find loans geared towards small businesses, with a breakdown of key points on each; so you can cut down the seemingly endless task of filtering through sites, and be closer to receiving your funding

Quebec Startup and Business Growth Loan Programs

A thriving business helps the economy flourish, and that's what the loans listed below aim to accomplish.

Invest Quebec’s Collective Entrepreneurship Program

What is it?

The Quebec collective entrepreneurship program is an important driving force of economic development. Companies and non-profit organizations can rely on Investissement Québec’s financing experts to help them obtain the financial support they need to bring their projects to their full potential.

As a complementary business financing tool, Investissement Québec will make it easier for social economy enterprises to carry out their projects, by offering capitalization loans that can complement other sources of capital. In providing additional financial leverage, these quasi-equity injections can enable companies to secure the necessary funding for their start-up, expansion, turnaround or consolidation initiatives with favourable terms.

What they offer: 

  • Loans at competitive rates
  • Loans in partnership with other lenders
  • Loan guarantees: guaranteed repayment of the net loss suffered by a financial institution that granted you a loan, line of credit or any other short-term financing
  • Quasi-equity financing in the form of subordinated debt
  • Purchase of preferred shares in a cooperative 

Loan amount and repayment terms

The minimum amount of financing available is $50, 000. This program may also cover up to 100% of project costs, usually in partnership with other lenders. This way you get the chance to keep your liquid assets free for ongoing operations. 

In terms of repayment, you may be eligible for deferral of payment - up to 24 months. Loan guarantees with variable conditions will depend on the business’s specific situation. 

How to qualify

To qualify, cooperatives and NPOs must engage in commercial activities, regardless of their industry or field of activity. 

Examples of eligible projects: 

  • Acquisition, expansion, construction or modernization of a building
  • Purchase of machinery or equipment
  • Working capital
  • Financing of worker-owned cooperatives to purchase employer shares
  • Refinancing
  • Entry into a new market
  • Acquisition of intangible assets (trademarks, patents, etc.)

Invest Quebec’s Productivité Innovation Financing

What is it?

Investissement Québec’s Productivity Innovation initiative works on helping businesses accelerate their growth through greater productivity and innovation. The goal is to encourage more businesses to take concrete steps to leverage innovation in all its forms and adopt technologies and processes such as automation, digitization, robotization and the use of artificial intelligence.

With this loan you will gain greater flexibility in planning and implementing your projects.

Loan amount and repayment terms

Every business’ situation is different and therefore requires a different plan.Investissement Québec’s Productivity Innovation initiative offers flexible terms tailored to your specific needs.

They offer a term loan of $50, 000 or more to eligible applicants. They also offer an increased level of flexibility by allowing deferral of principal payments for up to 48 months. 

How to qualify

All businesses operating in Québec that wish to grow through innovation and increased productivity and are part of the following industries: 

  • Primary agriculture
  • Mining
  • Construction
  • Manufacturing
  • Wholesale trade
  • Retail trade
  • Transportation and storage
  • Professional, scientific and technical services
  • Waste management and sanitation services

Exclusions may apply. Start-up operations are excluded.

The Investissement Québec’s Productivity Innovation initiative wants to see innovative projects that will increase a business’s productivity. This may involve a product, a process, commercialization efforts or organizational processes. 

Examples include the following:

  • An innovation process involving the adoption of new technologies (e.g. expert consulting fees, study costs, etc.)
  • Acquisition of innovative equipment to improve productivity (e.g. automation, robotization, etc.)
  • Integration of information technologies to enhance process efficiency (e.g. software, software packages)
  • Development of new ways to commercialize products (e.g. e-commerce platforms, etc.)
  • Enhancement or development of new products (e.g. R&D costs, etc.)
  • Introduction of new organizational processes to enhance agility (e.g. consulting fees, etc.)

SMBs and Large Corporations Project Financing

What is it?

The SMB’s and Large Corporation Project is for small to medium-sized businesses and large companies looking to move forward with new ideas. The SMBs and Large Corporations Project financing initiative will help by creating customized financial support. Some ways they will do is by offering: 

  • Loans at competitive rates
  • Loans in partnership with other lenders
  • Loan guarantees: Guaranteed repayment of the net loss suffered by a financial institution that granted you a loan, line of credit, letter of credit or any other short-term financial commitment
  • Quasi-equity financing in the form of debentures or subordinated debt

Loan amount and repayment terms

This fund may cover up to 100% of project costs, and minimum funding starts at $50,000. There is a possible deferral of principal repayment - up to 24 months -but the loan has variable conditions depending on the business's situation. 

How to qualify

The qualifying criteria for this loan are fairly flexible. Here are a few examples of industries that may qualify for these business financing options: 

  • Agriculture
  • Finance and insurance
  • Real estate (some activities are excluded)
  • Retail sales and comparable activities
  • Other sectors where the client base is made up primarily of individuals, except for the tourism sector

Eligible projects may include:

  • Purchase of machinery or equipment
  • Expansion, construction or modernization of a building
  • Entry into a new market
  • Refinancing
  • Financing of tax credits
  • Business succession or transfer by means of share acquisition
  • Merger or acquisition
  • Acquisition of intangible assets (trademarks, patents, etc.)
  • Working capital
  • Marketing of products or services
  • Exporting
  • Innovation

Québec Local Investment Fund (FLI)

What is it?

The Local Investment Fund (FLI) represents the main financial tool of regional county municipalities (MRCs) set up to support businesses in their territory. Aiming to stimulate local entrepreneurship, this fund loans seed capital for companies that enable the creation and maintenance of jobs, by providing technical and financial assistance to small and medium-sized businesses located in the territory of the MRC. 

The "local funds" are financial tools used to accelerate the implementation of business projects in the territory. Entrepreneurs that look to "local funds" can expect to receive support, advice and technical assistance appropriate to their project. The aim of the FLI is to: 

  • Create and support viable enterprises
  • Enable startups or expansions
  • Promote job creation
  • Contribute to the economic development of the MRC’s territory.

The FLI provides loans that make it possible to secure other sources of financing, such as a conventional bank loan, subsidy, investment or other additional capital. 

Loan amount and repayment terms

Total assistance may not exceed $50,000 per fund. Reimbursements are made through fixed monthly payments (principal and interest related) for the duration of the loan. In some exceptions, the "local funds" reserve the right to establish other repayment structures. Interest rates are determined based on desired return and on the risk level assigned to the investment. 

In some cases, the company may claim a capital repayment moratorium for a maximum period of 12 months. However, this period may be longer if the company exports products, to support growth or improvement of productivity without exceeding 24 months. 

How to qualify

In order to qualify, small business owners must present a comprehensive business plan; including projected financial statements for the first two years of operation, demonstrating that the company has good prospects of viability and profitability. They also need to demonstrate that financial assistance is essential for the project to work. 

The business owner must demonstrate: 

  • Promoter’s knowledge and experience in the field, as well as management skills
  • Project’s job creation potential
  • Capital injections from other sources such as a bank is a core factor (FLI loan will not exceed such injections)

Eligible expenses include: 

  • Capital expenditures such as land, buildings, equipment purchase, machinery, incorporation, or association fees and any other similar expenses, excluding goodwill expenses. 
  • Acquisition of technologies, software packages, patents and any other similar expense, but excludes any research and development. 
  • Working capital needs pertaining strictly to business activities calculated for the first year of operation.

Quebec Minority and Regional Financial Assistance Programs

These loans and business financing options are put in place to help give minority groups a fair chance at realizing their full potential.

Québec Indigenous Small Business Loans Guarantees

What is it?

This Quebec Indigenous Loan is for Indigenous communities and nations. The goal is to create an environment that fosters economic development by allowing Indigenous organizations to access conventional sources of funding and benefit from competitive interest rates. Creating and protecting jobs within this community is at the forefront of the mission. 

Loan amount and repayment terms

The Government of Québec guarantees a loan for 50% of the project’s eligible costs, up to $150,000 and the loan guarantee will be in force for up to five years. After that, the project applicant can obtain a grant for up to 5% of the guarantee, up to a maximum of $5,000, as long as certain conditions specified in the loan guarantee agreement are met. 

It is worth noting that an exception can be made for large-scale projects that have a significant driver effect for a community or nation.

How to qualify

Applicants must demonstrate their financial needs and submit a business proposal that includes the following information:

  • An explanation of covering why the finances are needed and the benefits - that will come from the project
  • The project location and targeted audience or customers
  • A breakdown of the project’s costs and all other secured funding sources
  • A description of the applicants’ applicable skillset and experience

  • The steps taken to check if the project is eligible for other sources of funding
  • The estimated operating budget covering the three-year period
  • If applicable the latest financial statements from the business or individual

Eligible organizations include: 

  • Indigenous nations and communities recognized by the Québec National Assembly
  • Indigenous and First Nations nonprofit organizations or equivalent
  • Indigenous and First Nations for-profit organizations or equivalent

Reasonable expenses directly related to the project and are eligible include:

  • Working capital expenditures and capital expenditures

  • Expenditures for the acquisition of software and equipment
  • Costs associated with the consolidation of prior debt covering the development or revival of a business

Lac-Mégantic Economic Assistance Fund

What is it?

The objective of the Lac-Mégantic Economic Assistance Fund is to support the economic and tourist development of the city of Lac-Mégantic. It works to elevate and diversify the economy while revitalizing entrepreneurial activity. 

As a result of this fund, the tourism sector will start to develop along with the enhancement of cultural heritage. And of course, it also supports the creation and maintenance of jobs in the area. 

Loan amount and repayment terms

The new additional financial assistance granted and the maximum amount of government assistance varies according to each individual project and can reach up to:

  • 90% for studies
  • 80% for other activities and projects

Financial assistance can take one of the following forms:

  • Interest loan
  • Interest-free loan,
  • Equity investment
  • Loan guarantee of up to 80% on net loss
  • Non-refundable contribution (grant)

How to qualify? 

Projects from all sectors of activity are eligible. However, they must meet at least one of the following criteria: 

  • For-profit small to medium-sized businesses legally incorporated in Quebec.
  • Cooperatives and social economy enterprises legally constituted in Quebec.
  • Companies located outside Quebec that have an investment project in the territory of the city of Lac-Mégantic.
  • Non-profit organizations legally constituted in Quebec.
  • Organizations in the education and health and social services networks.
  • Organizations in the city of Lac-Mégantic and the municipal bodies reporting to it.
  • Entrepreneurs wishing to acquire a significant stake in an existing qualifiable business.

Eligible projects for small businesses include: 

  • Studies and activities relating to the planning and development of projects
  • Development projects (innovation, market development and commercialization)
  • Investment projects linked to the creation and development of businesses;
  • The hiring of strategic personnel necessary for the development of a business project or the strengthening of a strategic function of the business or linked to an expansion project
  • Development projects for tourist, leisure and cultural attractions
  • The establishment or improvement of public infrastructure and basic equipment necessary for the development of businesses, excluding sewer, water and road networks.
  • Entrepreneurial succession support projects aimed at acquiring a significant stake of at least 25% of the value of an existing business or 25% of the fair value of its assets.

Fonds locaux de solidarité Montréal (FLS Montréal)

What is it?

Fonds locaux de solidarité Montréal is intended for start-ups and growing businesses. The main objective of this business financing is to produce and maintain jobs in social economy enterprises, for-profit companies and co-operatives. 

Loan amount and repayment terms

Financial assistant guidelines are as follows: 

  • FLS Montréal: maximum of $100,000
  • Variable terms
  • Interest rates vary according to risk

How to qualify 

In order to fit the eligibility criteria for this loan, small business owners and entrepreneurs must fall within these requirements: 

  • Be a citizen or permanent resident of Canada
  • Be legally constituted and entered in the Registre d’entreprises du Québec (REQ)
  • Have the location of your business in Montréal and your head office in Quebec
  • Submit a business plan, covering your objectives, current or budgeted financial statements and any other supporting documentation illustrating such actions
  • Illustrate your entrepreneurial experience, knowledge, and skills
  • Provide at least 20% of the total cost of your project

Eligible expenses include: 

  • Marketing costs
  • Working capital
  • Capital assets
  • The cost of patents or protection of the business’s intellectual property
  • Equipment acquisition or renewal
  • Acquisition of a company through succession or transfer
  • Prototypes developed by established companies

Getting ready to apply for a small business loan in Quebec? Gain additional support through loan funding by using accounting software like QuickBooks Online to help manage your business’s books and generate the financial reports you need to secure funding. Start a free trial today.

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