Loan Guarantees

The objectives of the Loan Guarantees component are to:

• create an environment that fosters economic development,
• contribute to business startup and development,
• help create and consolidate Indigenous jobs,
• generate investment in Indigenous communities, and
• allow Indigenous organizations to access conventional sources of financing and benefit from competitive interest rates.

Subject to the eligibility criteria, projects targeting the startup, development, recovery or consolidation of a business or eligible organization are admissible.

To be eligible for a loan guarantee, a project must allow the objectives of the component to be met and must be submitted no later than March 1, 2027.

All projects targeting the startup, development, recovery or consolidation of a business or eligible organization are admissible.

The promoter must demonstrate its financial need and provide the SAA with a business plan that includes:

• the amount of the loan requested,
• the justification for the financial need, and the relevance of the budget envelope to the project’s implementation,
• the project location and client groups targeted,
• a breakdown of project expenditure and funding, including details of other expected sources of funding,
• a description of the skills and experience of the other promoters connected with the project,
• the beneficial effects of the project,
• the steps taken to check the project’s eligibility for other funding programs,
• the estimated operating budget for a three-year period, and
• the most recent financial statements, if applicable.

Justified costs directly connected to the implementation of the project are eligible, and include:

• capital expenditures, and
• expenditures to consolidate existing debt in the case of a debt restructuring or relaunching of a business.

Expenditure on debt service or a capital loss is not eligible.

Debt from a line of credit (revolving credit) is not eligible.

Special condition for an infrastructure located outside the Indigenous community

To be eligible for funding for construction work of $100,000 and more on an infrastructure located outside the Indigenous community, an eligible organization must meet at least one of the following conditions:

• Hold title as the owner of the infrastructure concerned
• Be in the process of purchasing the infrastructure, as demonstrated by a formal written undertaking
• Hold or be in the process of obtaining a lease or emphyteutic lease that is or will be in force for at least five years after construction is complete

Financial assistance cannot be used to make a payment to any entity that:

• is named in the Register of enterprises ineligible for public contracts, or
• has, in the two years preceding the request for payment, failed to meet its obligations after being put on notice to do so in connection with financial assistance previously granted by a department or funding body of the Government of Québec

Requirement to seek bids

For an eligible project that requires construction work costing $100,000 or more, the eligible organization does not need to issue a public call for tenders to award the contract as provided for in the Act respecting contracting by public bodies.

However, the eligible organization must meet the following minimum requirements for awarding a construction contract of more than $100,000 but less than $1 million:

• Issue an open call for tenders with a public announcement
• Issue an invitation-only call for tenders to at least three qualified contractors.

For construction work over $1 million, the eligible organization must, at a minimum, issue an open call for tenders with a public announcement. These types of calls for tenders are usually posted in newspapers, displayed in the local offices of construction associations, and/or announced via a public electronic service. They must allow all qualified and interested contractors to bid on the contract. The announcements or public notices must be distributed widely enough to reach a suitable number of qualified and interested contractors, resulting in a competitive bidding process. 

For all calls for tenders for construction work, whether announced publicly or by invitation:

• the deadline for receiving bids must not be less than fifteen days, and
• bids can only be requested and contracts awarded,
  • at a fixed price, or
  • based on a unit price.

In general, projects will be assessed using the following criteria:

• Consistency with the program objectives and principles:
  • Eligibility under the terms and conditions
  • Compatibility of the objectives with the objectives of the component
• Technical feasibility of the project:
  • Mastery of the technical aspects
  • Realistic timeframe for completing the project
• Financial feasibility of the project:
  • Detailed financing plan
  • Reliability, coherence and realism of the budget forecasts
  • Cost-effectiveness
• Quality of the organization:
  • Relevance of the promoters’ skills and experience
  • The appropriateness of the choices made with respect to outside experts, if applicable
• Thoroughness of the market analysis, including knowledge of client groups’ needs
• Results to be achieved using the funding requested:
  • Number of jobs created or maintained
  • Investment generated
  • Contribution made to local and regional development
  • Economic and social sustainability
  • Structuring effects for Indigenous people

Financial assistance will be provided in the form of a loan guarantee to support economic development initiatives.

The Government of Québec may guarantee a loan representing 50% of eligible project costs, up to a maximum of $150,000.

An exception may be made for large-scale projects that will provide significant leverage for an Indigenous community or nation.

To encourage partnerships between Indigenous and non-Indigenous people, any organization or business forming part of such a partnership will be 100% eligible for the program, provided that the Indigenous promoter retains effective control and owns at least 50% of the partnership, if it is an enterprise.

If the Indigenous promoter owns less than 50% of the partnership, the eligible costs will be covered up to the same percentage.

For the purpose of calculating the financial contribution made by the Government of Québec or its agencies, loan guarantees will be assessed at 3% of the amount guaranteed.

Once a project is authorized, a loan guarantee agreement between the beneficiary and the Government of Québec will be drawn up. The agreement will define the project, the conditions of the loan guarantee, and the parties’ obligations. It will also provide for a reporting procedure.

A banking arrangement between the lender and the Government of Québec will also be set up for each authorized project.