Government Grant and Tax Credit Financing
Canadian governments hand out billions each year in innovation tax credits and grants. The problem is timing. You spend the money now and the refund arrives months later, sometimes more than a year later. Grant and tax credit financing bridges that gap by advancing against a claim you have not yet been paid.
It is non-dilutive. You are borrowing against money that is already owed to you, so there is no equity, no valuation and no board seat involved.
Table of contents
What can be financed
Most Canadian refundable credits and many grant programmes can be bridged:
- SR&ED — the largest programme, covered in depth on our SR&ED financing page
- Interactive digital media tax credits — OIDMTC in Ontario, CDAE in Quebec, and provincial equivalents
- Film and television production credits
- IRAP contributions from the National Research Council
- SDTC funding for clean technology
- Provincial innovation grants, including Alberta Innovates, Protein Industries Canada, Ocean Supercluster and Scale AI
How it works
The lender reviews your claim history and the strength of the current claim, then advances a percentage of the expected refund. When the government pays, the advance is repaid from the proceeds. Structures vary between a fixed-term loan and a revolving line you draw against as expenses accrue through the year.
Advances typically run 60% to 80% of the expected refund. Lenders take security over the credit receivable itself, and many explicitly avoid personal guarantees.
What it costs
Pricing usually sits well below equity and often below unsecured lending, because the underlying receivable is a government obligation. The cost is best judged against the alternative: waiting. If a refund is twelve months away and the capital would fund another year of development, the comparison is not against a cheaper loan, it is against not doing the work.
Who this suits
- Canadian companies with a track record of successful claims
- R&D-intensive businesses in software, life sciences, manufacturing and clean tech
- Studios and developers claiming digital media or film credits
- Companies that have been awarded a grant but face a long disbursement schedule
- Founders who want runway without raising equity
Where it is the wrong tool
First-time claimants often struggle to qualify, since lenders lean heavily on claim history. Very small claims may not clear minimum thresholds — some lenders require an expected refund above roughly $130,000. And if your claim is contested or your eligibility is uncertain, financing it adds risk rather than removing it.
Compared with the alternatives
- SR&ED financing is the deep dive on Canada’s largest programme, and is where most companies start.
- Venture debt can be larger but usually requires institutional backing.
- Revenue-based financing suits companies with recurring revenue but no meaningful credit claim.
Lenders on Levr
Specialists in the Levr lender directory include Finalta Capital, which has deployed over $500M since 2012, Venbridge for SR&ED and digital media credits, and Bonsai Growth, which covers IRAP, SDTC and a wide range of provincial grants.
Find grant and tax credit lenders
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Frequently asked questions
Can I finance a grant before it is approved?
Generally no. Most lenders want the award confirmed. Once it is, the disbursement schedule can usually be bridged.
Do I need to have claimed before?
It helps considerably. Some lenders will consider first-time claimants who are venture-backed or working with an established claim preparer.
How much of the refund can I access?
Commonly 60% to 80%, depending on programme, claim history and the quality of your documentation.
Does this affect my claim?
No. Financing does not change eligibility or the amount you receive; it only changes when you receive it.