Loan guarantees

A loan guarantee budget totalling $4 million is earmarked for Indigenous people in Québec.

The objectives are to

  • create an environment that fosters economic development,
  • allow Indigenous organizations to access conventional sources of funding and benefit from competitive interest rates,
  • create and develop businesses, and
  • create and protect jobs.

Eligible organizations

  • Indigenous communities and nations recognized by the Québec National Assembly
  • Indigenous nonprofit organizations or equivalent
  • Indigenous for-profit organizations or equivalent

Eligible projects

All projects that aim to create, expand, revive, or develop a qualifying business or organization are eligible.

To be eligible for a loan guarantee, projects must meet the objectives of this component and be submitted no later than March 31, 2022.

Submitting applications

Project applicants must demonstrate their financial needs and submit to the SAA a business plan that includes the following information:

  • An explanation of financial need and the benefit of using this component to carry out the project
  • The project location and targeted clientele
  • A breakdown of the project’s expenses and funding, including details on other sources of funding
  • A description of the applicants’ relevant skills and experience
  • How the project will be beneficial
  • What has been done to check whether the project is eligible for other funding programs
  • The three-year estimated operating budget
  • The latest financial statements, if applicable

Eligible costs

Expenses that are justified and directly related to the project are eligible, including:

  • Capital expenditures
  • Working capital expenditures
  • Expenditures for the purchase of software and equipment (including rolling stock)
  • Expenditures for the consolidation of prior debt when developing or reviving a business

Expenditures for business acquisitions or acquisitions of interest in existing companies will be eligible if it has a direct and significant impact on the creation or protection of jobs for Indigenous people. The job creation aspect will be assessed according to the payroll or expected payroll to be paid by the eligible company or organization for all jobs held by Indigenous people and created or secured through the project.

For projects that require a line of credit guarantee (revolving credit), only expenditures on working capital that is essential for the project is eligible.

Ineligible cost

Expenditures related to servicing debt or capital losses are not eligible.

Construction projects

Special condition for infrastructure projects outside Indigenous communities

To be eligible for funding for infrastructure outside an Indigenous community, the organization must meet at least one of the following conditions:

  • Hold the title to the infrastructure
  • Be in the process of purchasing the infrastructure and provide official written proof
  • 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

Requirement to seek bids

For eligible projects that require $100,000 or more in construction work, pursuant to the Act respecting Contracting by Public Bodies the eligible organization is not required to hold a public call for tenders to award the contract.

However, the eligible organization must meet the following minimum requirements for awarding a $100,000 to $1 million construction contract:

For construction work over $1 million, the eligible organization must, at a minimum, hold a publicly announced open call for tenders. 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. Such calls for bids must allow all competent and interested contractors to bid on the contract. The announcements or public notices must be distributed widely enough to reach an adequate number of competent and interested contractors, resulting in a competitive bidding process.

For all calls for construction bids, whether announced publicly or by invitation only,

  • the deadline for bids must be at least two weeks after the calls are posted, and
  • bids can only be requested and contracts awarded
    • at a flat rate,
    • based or on unit price.

Project assessment criteria

In general, projects are assessed according to the following criteria:

  • Consistency with the program objectives and principles:
    • Eligibility in accordance with the terms and conditions
    • Compatibility of the objectives with the objectives for this component
  • Technical feasibility of the project:
    • Expertise in the technical components
  • Realistic schedule
  • Financial feasibility of the project:
    • Detailed financial plan
    • Solvency of the applicant and partners and the amount of their down payment
    • Reliable consistent, and realistic budget forecasts
  • Quality of the organization:
    • Relevance of the applicants’ skills and experience to the project
    • Outside  experts selected with care, if applicable
  • Thorough market analysis, including knowledge of the target clientele’s needs
  • Results achieved from the funds requested:
    • Number of jobs created or secured
    • Investment generated
    • Contribution to local and regional economic development
    • Economic and social sustainability
    • Far-reaching effects for Indigenous people.

How financial assistance is determined

Financial assistance is given in the form of a loan guarantee to support economic development initiatives.

The Government of Québec can guarantee a loan for 50% of the project’s eligible costs, up to $150,000.

An exception can be made for large-scale projects that have a significant driver effect for a community or nation.

The loan guarantee will be in force for up to five years. After that, the project applicant can obtain a grant for up to 5% of the guarantee, up to a maximum of $5,000, if certain conditions specified in the loan guarantee agreement are met.

In order to encourage partnerships between Indigenous and non-Indigenous people, any organization or business formed by such a partnership will be 100% eligible for the program, under the condition that the Indigenous applicant retain effective control and own at least 50%, in the case of a company.

If an Indigenous applicant owns less than 50%, the ownership percentage will be used to determine the amount of financial aid granted for the project.

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.

Last update: February 23, 2023


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