Canada’s development bank launches $500M AI push for small businesses to spur productivity

Canada’s Business Development Bank is stepping up efforts to help firms — including everyday businesses from bakeries to manufacturers — leverage artificial intelligence, and tackle a long-standing problem: a reluctance to take risks on innovation.

On Friday, BDC launched a new $500-million program that it says aims at helping more than 1,000 small and medium-sized firms adopt AI in Canada, as policy-makers and economists warn the country is falling behind on productivity.

The initiative is called LIFT, “Lead with Innovation and Focus on Technology.” The bank says the program will pair entrepreneurs with expert advice and flexible financing to reduce the uncertainty over investment. To apply, businesses must generate at least a million dollars in sales annually.

“The main roadblock that we see for entrepreneurs is not that they don’t think AI has potential,” said Véronique Dorval, the bank’s chief operating officer, in an interview with The Gazette. “It’s that sometimes they don’t know where to start and how to make AI really create real benefits for their business.”

About 30 per cent of Canadian small and medium-sized businesses used AI in 2025, according to BDC data, and those that did were associated with 24 per cent higher productivity. 

In Quebec, adoption is slightly higher, at about 37 per cent.

According to data in April from the Quebec Innovation Council, just two out of five Quebec companies intend to innovate in the next three years. Ontario is at a similar level, at 41 per cent, while British Columbia is slightly higher, at 46 per cent.

“Risk aversion comes from having uncertainty about what to do,” said BDC’s Dorval. “But because we have advantageous conditions, it makes it less costly for entrepreneurs or less risky for entrepreneurs to invest.”

The idea behind pairing businesses with advisers, she said, is they can help identify where the technology can deliver value best. And from there, companies can access financing ranging from $25,000 to $5 million, with flexible terms, including the option to delay principal repayments for up to two years.

The program also aims to strengthen Canada’s domestic tech ecosystem, she added, through the preferential financing. This is at 2.25 per cent interest, she said. And it’s offered to businesses that adopt at least one Canadian-developed component, whether software, hardware or integration.

If Canadian firms matched the technological maturity of the country’s most advanced companies, GDP could grow by up to 14 per cent, according to BDC research. Productivity could rise by as much as 38 per cent.

BDC’s push also comes amid renewed tensions with the United States ahead of a July review of the Canada-U.S.-Mexico Agreement, or CUSMA, which governs most of Canada’s trade with its largest partner.

Prime Minister Mark Carney has described recent U.S. actions, under president Donald Trump, as a “rupture in the world order.”

It’s in that context, the question of who builds and controls AI systems has taken on greater urgency, especially as the dominant global tech companies remain overwhelmingly American.

In 2025, nearly six in ten Canadians have used an AI tool, according to a Leger survey.

Dorval said she sees AI literacy, which is the ability to understand, use and apply the technology, rising among entrepreneurs especially, but the level of understanding still varies widely.

“I was just recently visiting a number of entrepreneurs and I was quite surprised to see the fact that most of them have already started thinking about AI for their company. 

“But many of them are missing just that next step: they don’t see exactly where it’s going to fit in their company.”

Do you have a story tip? Write to me at [email protected]

Harry North

I’ve been writing for the Montreal Gazette since 2023, chasing the biggest stories I can find and always looking for new ways to tell them. I studied economics and computer science at McGill. Now I live in the city’s Plateau, where I wear Doc Martens to blend in among the hipsters. It doesn’t work. Seen something interesting? Email me: [email protected]

The post Canada’s development bank launches $500M AI push for small businesses to spur productivity appeared first on Montreal Gazette.