SMB Financial – Technological and Design Innovation

This financial assistance aims to support companies wishing to carry out a technological R&D or design innovation project. It takes the form of a repayment guarantee of up to 80% of the net loss of a term loan by a financial institution. Investissement Québec may also provide a term loan of up to 75% of the total cost of the project if the company is unable to obtain any other form of financing.

Eligibility Criteria

Technological innovation

An R&D technological innovation must:

• Involve the investigation, development, and verification of research hypotheses for the purpose of developing new processes or materials or to improve, even slightly, existing processes or materials;
• Involve uncertainty about the methods that will be used to achieve the project’s objectives.

The final phases of a project that has all of the above characteristics are eligible even if the business has already completed a major part of the project or has acquired technology from another business (technology transfer). These phases include the following:

• Developing tools
• Producing prototypes
• Technical testing
• Beta testing
• Developing technical documentation
• Patenting
• Certification expenses

New economy

By new-economy projects, we mean the research and development of processes or products, pre-commercial or commercial development, or the development of markets in the following sectors of activity:

• Biotechnology
• Pharmaceuticals
• Information technology, including activities pertaining to computer hardware, semi-conductors, software, data-processing, and telecommunications
• Aeronautics and aerospace
• Materials engineering
• Instrumentation, including optical instruments and lenses, scientific engineering equipment, process control, and electronic instrumentation.

To secure a repayment guarantee for the realization of a new-economy project, a business must have fewer than 100 employees and annual sales of less than $10 million.

Design innovation

An innovation project in industrial or fashion design must:

• Aim to improve or develop innovative products or products that are competitive in terms of design
• Be carried out by qualified employees

Eligible Activities

Research and development

Summary

Terms and conditions of the guarantee

• Maximum percentage of repayment guarantee: 80%
• Minimum amount of the guarantee: $50,000  
• Maximum term of the guarantee: ten years, from the date of the first disbursement
• A direct loan may be authorized in exceptional cases.

Terms and conditions of the term loan

• Loan may cover up to 75% of the project costs, including the required working capital (which may equal other eligible expenses)
• For new-economy projects, the maximum percentage is 90% in the case of start-up projects
• Fixed or variable interest rate
• Possible provision for delay in the repayment of capital
• Repayment of capital usually fixed
• Specific security on project assets
• Universal hypothec on other assets subject to securities granted in favour of existing lenders

Fees

• A guarantee fee is required and varies with risk
• A commitment fee, usually 1.25% of the amount at risk, is also required (except for new-economy projects)
• Premium or stock option arrangement possible (the stock option does not apply to new-economy projects).

For more information, call Investissement Québec at 1 866 870-0437 or consult the Web site at http://www.investquebec.com/en/index.aspx?page=1283