The cost of borrowing money just went up. Unlike their US counterparts, Canadian banks that held positions in high-risk US mortgages will likely not receive a bail-out package.  The net impact of the mortgage crisis is that Canadian banks will have to increase their lending rates to make up for their losses.

This is a great opportunity to explore alternative financing options.  Two programs which many businesses are not aware of are the federal government’s IRAP (Industrial Research Assistance Program) and SR&ED (Scientific Research and Experimental Development) programs.

IRAP is run in conjunction with the National Research Council of Canada (NCR), and provides non-repayable contributions to Canadian small and medium-sized enterprises (SMEs) interested in growing by using technology to commercialize services, products and processes in Canadian and international markets. NRC-IRAP also provides mentoring support and invests on a cost-shared basis for research and pre-competitive development technical projects, upon assessment of a project and firm by a team of Industrial Technology Advisors.  Canadian SMEs with under 500 employees and industrial associations desiring to enhance their technological capability are eligible for support.

The SR&ED program is a federal tax incentive program, administered by the Canada Revenue Agency (CRA), that encourages Canadian businesses of all sizes, and in all sectors to conduct research and development (R&D) in Canada. It is the largest single source of federal government support for industrial R&D. The SR&ED program gives claimants cash refunds and/or tax credits for their expenditures on eligible R&D work done in Canada.