How to finance an innovation project: SR&ED and other Quebec programs
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Funding an innovation project in Quebec does not mean choosing between a single program and a single application. It means building a coherent set-up, adapted to the real stage of the project: proof of concept, prototype, technical validation, automation, pre-marketing or marketing.
The two main levers are tax credits and direct aid. At the federal level, SR&ED can support eligible research and experimental development. In Quebec, CRIC complements this support for certain research, innovation and pre-commercialization expenses. In addition, NRC-IRAP, Investissement Québec programs, Mitacs, NSERC, Impulsion PME or PSCE programs can be added. The right assembly always depends on the nature of the work, the expenses, the schedule and the stage of development.
Progrès Conseils, a consulting firm founded in 2003, supports SMEs in this strategic interpretation: identifying the right levers, sequencing them correctly, documenting expenses and avoiding leaving money on the table.
You have an R&D or innovation project, but the bill is holding you back. The good news: Canada and Quebec offer a particularly developed financing ecosystem for innovative SMEs. The difficulty is therefore not only to find programs. It is to understand which ones are relevant, when to activate them and how to prevent poorly coordinated aid from reducing the expected tax advantage.
Here’s how to structure your thinking before putting together a file.
What funding should you aim for depending on your stage of project?
The most common reflex is to look for a grant even before having clarified the project. It is often the opposite that must be done: start from the development stage, then choose the appropriate levers.
| Project stage | Main need | Levers to explore |
| Idea or proof of concept | Validate technical feasibility and document uncertainty. | SR&ED, research collaborations, Mitacs, NSERC depending on the context. |
| Prototype or technical validation | Fund testing, iterations, technical salaries and eligible materials. | SR&ED, CRIC, NRC-IRAP, Innovation Program. |
| Automation or Equipment | Reduce costs, improve productivity, or integrate new capacity. | ESSOR, credits applicable if a share of technological development is present. |
| Pre-marketing | Moving from prototype to first customers and reducing the financing gap. | CRIC for certain eligible expenses, Impulsion PME, PSCE depending on the project. |
| Marketing and export | Structure marketing, sales and new markets. | PSCE, private financing, business partners, sectoral programmes. |
This grid is not a substitute for an eligibility analysis. It is used to avoid a costly mistake: asking for the right program at the wrong time, or financing an expense that would have been better structured in a tax credit with a grant.
R&D tax credits: the basis of financing
Tax credits are often the basis of the set-up, because they come back every year when the work and expenses are eligible. Unlike a grant, they do not depend on a one-time call for projects. However, they require rigorous documentation during the work.
SR&ED: The Federal Credit
SR&ED, scientific research and experimental development, remains the main tax incentive for R&D in Canada. For a qualifying Canadian-controlled private corporation, the federal credit can be up to 35% of eligible expenditures within certain limits under the program.
The measures announced and adopted as part of the 2025 federal budget have enhanced the program, in particular by increasing the spending limit giving access to the enhanced rate and the return of certain capital expenditures to the eligible base. For manufacturing, robotics or technology SMEs, this change can be significant, but it must be analyzed on a project-by-project basis.
To secure your claim, the critical point remains the same: document the technological uncertainty, the systematic approach, the tests and the time spent on the project. Also check out our article on how to document your SR&ED project.
RCIC: the new Quebec credit
In Quebec, the Research, Innovation and Pre-Commercialization Tax Credit, or RCIC, replaces the former provincial SR&ED credits for tax years beginning after March 25, 2025. It is intended to support a broader range of expenditures related to research, innovation and certain pre-commercialization activities.
For a Quebec SME, the issue is not only to claim a federal credit and a provincial credit. The challenge is to coordinate the two, to properly classify expenditures and to avoid overlaps that reduce net recovery.
Direct grants and contributions
Where tax credits reimburse or reduce some of the expenses after the fact, direct grants and contributions can support the project sooner. However, they are more selective: they have criteria, submission windows, economic priorities and sometimes limited envelopes.
NRC-IRAP: for technology SMEs
NRC-IRAP is often one of the first levers to consider for an SME developing a technology. It can support development, validation or technological integration work, in addition to offering the support of industrial technology advisors.
Investissement Québec programs
Investissement Québec administers several levers that may apply depending on the nature of the project:
- Innovation program : for the development of an innovative product or process, often with research partners.
- ESSOR program : for investment, automation, robotization or digital transformation projects.
- Impulsion PME : for young innovative companies that need to take a pre-commercialization or growth step.
- Marketing and Export Support Program (CESP): to structure marketing and market development.
Mitacs and NSERC: Funding talent and research
If your project involves collaboration with academia, Mitacs can fund internships or projects that connect the company with research talent. NSERC, through its partnership programs, can support university-industry collaborations in applied research. These levers are particularly useful when the company needs scientific or technical expertise that it does not yet have in-house.
Private financing: useful, but rarely the first reflex
Most R&D projects are primarily financed through a combination of tax credits, grants, contributions and equity. Private capital often comes in later, when the project needs to go through a stage of growth, commercialization or expansion that goes beyond what public support can cover.
Raising funds then requires a different case: a clear market, traction, credible projections, secure intellectual property and a defensible business strategy. This is a step that is being prepared long before the first discussions with investors.
The real skill: putting together a coherent assembly
Having access to several programs is useless if you stack them badly. A subsidy received at the wrong time can reduce the base of expenses eligible for a tax credit. An expense that is misclassified may become ineligible. A missed call for projects can postpone a critical phase by twelve to twenty-four months.
A good assembly therefore answers four questions:
- What is the actual stage of the project?
- What expenses are planned, and which are potentially eligible?
- What levers should be requested before, during or after the work?
- What documentation should be prepared to withstand a tax or administrative examination?
This is exactly the role of our R&D financing department: analyze the project, prioritize the levers, prepare the requests and structure the documentation with your teams.
Where to start
The best place to start is not a program. It’s your project. Define what you want to develop, what is technically uncertain, what you need to test, what expenses you expect to spend and when they will be incurred.
From there, it becomes possible to build a realistic funding map: tax credits, grants, contributions, research collaborations and, if necessary, private funding.
Do you want to know which levers are really worthwhile for your project? Have your financing package analyzed : our experts can identify the relevant programs, eligibility risks and the next steps to prioritize.
Caution: Programs, criteria, rates and deposit windows are subject to change. Eligibility always depends on the specific nature of the work, the expenses incurred, the tax schedule and the documentation available. Official sources must be verified when publishing or submitting an application.
What programs fund an innovation project in Quebec?
Funding generally combines two families: tax credits, such as SR&ED at the federal level and CRIC in Quebec, and direct assistance such as NRC-IRAP, Investissement Québec programs, Mitacs, NSERC or the PSCE. The right set-up depends on the stage of the project, the expenses and the schedule.
Can SR&ED be combined with a grant?
Yes, in many cases, but the rules of interaction must be analyzed. A grant may reduce the base of expenses eligible for the tax credit. The coordination of levers is therefore essential to maximize net recovery.
What funding should I choose for a proof of concept?
A proof of concept can be supported by SR&ED if it involves real technological uncertainty and a systematic approach. Depending on the project, research collaborations, MITACS, NSERC OR NRC-IRAP may also be explored.
Can a company with no profit be financed?
Yes. Some tax credits may be refundable for eligible businesses, and several programs are aimed at SMEs in development, technological validation or pre-commercialization. The absence of profit does not therefore automatically exclude financing.
How long does it take to get innovation funding?
It depends on the lever. A tax claim is prepared during the year and is claimed with the declaration. Grants often follow calls, deadlines, or file reviews. Late planning can delay funding by months.