Canadian AI and Automation Funding: Grants, Loans, and Tax Credits for 2026 

Artificial intelligence (AI) may be changing your business and the world as we know it, but there’s seemingly one question on everybody’s mind: who pays for the transformation? 

“Canada must be open to the enormous opportunities in AI, but we must also be candid about the real concerns. AI raises hard questions about job security, privacy, sustainability, sovereignty, and trust. Responding to these concerns and building responsible Canadian AI will not be easy, but it must be done. We will face these challenges head on.” 
– Evan Solomon, Minister responsible for the Federal Economic Development Agency for Southern Ontario 

For Canadian companies investing in AI, automation, robotics, and digital transformation, government funding can help reduce the cost and risk of innovation. Federal and provincial programs are supporting everything from AI research and software development to technology adoption, automation projects, and large-scale infrastructure.  

For businesses exploring how automation and robotics can safely support productivity, our blog about automation and robotics funding in Canada provides context on funding opportunities tied to modernization and advanced manufacturing. The key is matching the project to the right funding program, eligibility requirements, and stage of development. 

Federal Funding for AI and Automation 

For larger, transformative projects, the Strategic Response Fund (SRF) is an important federal option. The SRF program supports large-scale projects that strengthen Canadian industrial capacity and competitiveness, including AI and advanced technologies. Its AI Compute Challenge is accepting proposals on an ongoing basis for projects that build or expand domestic AI compute capacity and related infrastructure. 

The SRF also has a second 2026 intake planned for the fall under its food processing, supply chain, and manufacturing call. While this is not a general AI intake, eligible projects can involve modernized production and supporting technologies, making automation and AI potentially relevant components of qualifying projects. 

For innovative Canadian small and medium-sized enterprises (SMEs), the National Research Council of Canada’s Industrial Research Assistance Program (NRC IRAP) remains another important source of support. Its AI Assist initiative supports eligible SMEs developing and adapting generative AI and deep learning solutions, including scientific research, product development, testing, and validation. The NRC has confirmed that IRAP and AI Assist will continue in 2026–27. 

Canadian businesses should also consider Scientific Research and Experimental Development (SR&ED) when AI or automation involves genuine technological uncertainty and experimental development. Eligible work can include developing or improving products, processes, and software where the outcome could not be achieved using established knowledge alone. Computer programming, testing, engineering, and data collection may qualify when they directly support eligible SR&ED work. 

Quebec and Ontario Funding for AI and Automation 

Quebec businesses have access to Prompt, which supports technological innovation projects involving advanced AI and other digital technologies. Prompt’s AI program, PARTENAR-IA, focuses on Quebec-based business consortia developing and commercializing AI technologies collaboratively. Prompt’s site identifies its collaborative innovation financing as open year-round and encourages companies to contact an advisor to determine the appropriate funding pathway. 

For businesses pursuing digital transformation and automation in Quebec, ESSOR can also be relevant. The program supports investment projects designed to improve productivity and competitiveness. Current ESSOR programming includes support for digital diagnostics and plans that can incorporate AI, as well as implementation of digital plans. Depending on the stream, businesses can access non-repayable assistance of up to 50% of eligible costs. 

In Ontario, the Ontario Centre of Innovation (OCI) offers several pathways supporting digital modernization and technology adoption. Through its Digital Competence Centre, eligible SMEs can access up to $15,000 through the Digital Modernization and Adoption Plan (DMAP), with applications accepted on a first-come, first-served basis while funding remains available. The Retail Modernization Project Grant can additionally provide up to $5,000 for eligible businesses adopting digital technologies. 

While the OCI’s AI-specific Collaborate 2 Commercialize call ran from July 15 to September 15, 2026, and that intake has now closed, businesses should continue checking the OCI for future AI-specific calls as well as currently available digital adoption programs. 

Regional AI and Automation Funding  

The Regional Artificial Intelligence Initiative (RAII) provides another pathway for Canadian SMEs developing, commercializing, or adopting AI. Through Canada’s regional development agencies (RDAs), RAII supports projects ranging from AI product commercialization to integrating AI into business operations. For example, Canada Economic Development for Quebec Regions offers RAII as an ongoing program accepting applications, with interest-free repayable support of up to 50% of authorized costs for eligible SMEs. 

Availability and application timelines vary by region. Prairies Economic Development Canada (PrairiesCan), for example, is accepting RAII applications on a continuous basis through December 31, 2028, subject to available funding. 

For businesses considering AI funding, the project itself should drive the funding strategy. A company developing proprietary AI technology may have a strong R&D case for IRAP and SR&ED. A manufacturer implementing automation or AI-enabled production technologies may have opportunities through ESSOR, OCI, regional programs, or larger federal initiatives. Larger-scale infrastructure and commercialization projects may require a different funding structure altogether. 

For a broader breakdown of AI-focused grants, tax credits, and funding options, our article on the top AI funding programs, grants, and tax credits offers additional funding program context for companies planning investments in artificial intelligence. 

Plan Your AI and Automation Funding Strategy 

Government funding for AI and automation is available across several stages of the innovation cycle, but program eligibility, timing, eligible costs, and stacking rules matter. Some funding programs support R&D, others focus on adoption or commercialization, and some are designed for large capital projects. 

Planning early can help businesses identify potential funding opportunities before committing to project costs, structure eligible expenditures appropriately, and determine where grants, loans, and tax incentives such as SR&ED may complement one another. SR&ED eligibility can remain available even when other government funding is received, although businesses need to understand how government assistance affects the calculation and reporting of eligible expenditures. 

Ready to explore funding for your AI or automation project? Contact our Government Funding team. Our specialists can help assess your project, identify relevant funding opportunities, and build a strategy for pursuing available grants, loans, and tax incentives. Get in touch with our team to start planning your application.