The Business Development Bank of Canada has launched a $500-million loan program to help small-business owners adopt artificial intelligence, as economists warn that Canadian companies are falling behind global peers in using the technology.

The federal Crown corporation on Friday unveiled LIFT—which stands for Lead with Innovation and Focus on Technology—an initiative designed to help more than 1,000 small and medium-sized businesses integrate AI into their operations. 

The program will pair businesses with industry advisors who have AI expertise to determine where the technology could create measurable benefits, and provide financing to support those projects.

Companies with more than $1 million in annual sales are eligible for the support, regardless of what sector they are in. Loan recipients can borrow up to $2 million for AI adoption projects and $5 million for projects involving physical AI, such as robotics. To receive the money, projects need to include at least one Canadian component, such as domestically developed software or hardware. 

Borrowers will pay 2.25 per cent interest on the loans, the same as the Bank of Canada’s current overnight rate, and BDC will give them up to two years to repay the principal, under certain conditions. “The idea here is to help entrepreneurs feel more comfortable to make a decision to invest now,” said BDC chief operating officer Véronique Dorval. 

The federal government has launched other lending programs to encourage AI adoption, including a $200-million Regional Artificial Intelligence Initiative and a $100-million AI Assist program to help businesses integrate AI into their operations. Uptake, however, remains low. 

About 12 per cent of Canadian businesses reported using AI in the second quarter of 2025, according to Statistics Canada, with adoption concentrated in larger firms and knowledge-intensive industries. Finance and insurance businesses, for example, logged nearly 31 per cent adoption, while use among agriculture, transportation and food services businesses remained below two per cent. 

BDC’s own analysis pegged AI adoption at around 30 per cent among small and medium-sized businesses in 2025. Businesses that used the technology were 24 per cent more productive than those that did not, the bank found. 

Adopting AI requires more than just purchasing software. Companies typically need to train staff and update internal workflows, which takes resources many entrepreneurs don’t have. A 2025 OECD report cited skills shortages and financial constraints as the main barriers holding small businesses back from using AI. 

Dorval said LIFT is meant to get entrepreneurs past those barriers by identifying “where AI can have real impact that will translate into bottom-line benefits,” she said, and getting the money needed to invest without putting too much pressure on short-term cash flow.