Repayable contribution or grant: weighing the new tariff support

If tariffs have cost your British Columbia business sales, you now have two kinds of federal money to consider. One is non-repayable. The other is a repayable contribution. It is interest-free, but it is still a debt your business must repay. Most firms will apply for the non-repayable money first and think about the rest later. We think the choice deserves the same care as any other capital decision.

What changed in August and September

On August 25, 2026, the federal government announced a $7.5 billion package of measures for workers and businesses. It included an additional $1.5 billion for the Regional Tariff Response Initiative (RTRI). The Canadian Federation of Independent Business (CFIB) reports that expanded RTRI applications opened on September 8, 2026, for businesses directly or indirectly affected by trade disruptions. In British Columbia, Pacific Economic Development Canada (PacifiCan) delivers the program.

The main change is the size of the non-repayable portion. The Department of Finance backgrounder says the cap rises from $1 million to $3 million. It now covers demonstrated liquidity needs as well as pivot or capital investment plans. PacifiCan splits that amount into up to $2 million for liquidity and up to $1 million for pivot projects. Repayable support over $1 million is available for larger transformation projects.

To apply in British Columbia, a business must meet several basic tests. It must be incorporated, for-profit, and located and operating in the province. It needs at least $1 million in annual revenue in one or both of its last two fiscal years. It must also have been viable before the tariffs.

What the non-repayable money covers

The liquidity portion is tied to payroll. PacifiCan’s applicant guide sets it at 50% of average eligible monthly payroll, for up to 12 months and no later than March 31, 2028. The maximum is $2 million. The RTRI frequently asked questions (FAQ) adds that funding will not go above your demonstrated need or $2 million, whichever is less. It may also be reduced to account for other government assistance.

The pivot portion is a cost share. The FAQ says a non-repayable contribution normally covers up to 50% of total project costs, where the project shows broader economic benefits. You fund the other half.

Because pivot funding is capped at $1 million, the non-repayable route fits projects of about $2 million or less. Beyond that size, the rest of the money has to come from somewhere else. That is where the repayable side comes in.

How a repayable contribution works under RTRI

The repayable side is built for larger projects. The FAQ says a repayable contribution over $1 million for a larger commercial project can cover up to 75% of total project costs. A single business can receive at most $20 million under RTRI, including liquidity support.

RTRI repayable contributions are interest-free. If you are approved, the payment schedule is set out in your contribution agreement. Other PacifiCan programs show what a schedule can look like. Under the Regional Defence Investment Initiative, now closed to applications, repayment normally began one year after the project was finished. It was paid in equal monthly instalments over five years, with no collateral and no penalty for repaying early.

Those are good terms. Interest-free money is still debt. Each instalment comes out of operating cash flow, possibly in years when tariffs are still hurting sales. Before you take the larger cost share, test the repayments against a cautious sales forecast, not your business plan.

You will also need to show where your share of the project costs comes from. On the defence program, PacifiCan did not accept forecast revenues, receivables, commitments of future funding or SR&ED credit receivables as confirmation of funding. Expect a similar standard and confirm your sources early.

Interest-free money is still debt.

Other tariff support for BC businesses

RTRI is not the only tariff support available. The federal government reports more than $25 billion in support so far, plus the $7.5 billion announced in August.

• BDC Pivot to Grow. The Business Development Bank of Canada’s new liquidity stream lends $250,000 to $5 million. The terms are 0% interest for the first 12 months, interest-only payments over 36 months, and amortization over 96 months. The Department of Finance says the revenue requirement for BDC’s direct tariff programs is lowered to $1 million.
• PacifiCan’s ongoing repayable programs. The Business Scale-up and Productivity stream offers interest-free repayable funding to incorporated businesses. PacifiCan’s general rule is that contributions to for-profit organizations or commercial projects may be repayable.
• Canada Strong Diversification Fund. The Department of Finance describes this new stream of the Strategic Response Fund as having an additional $2 billion. It supports tariff-affected companies with shovel-ready projects that maintain existing capital, including medium-sized firms.

Each option has a different cost and makes a different claim on future cash. BDC’s 0% rate covers only the first 12 months. The capital maintenance fund fits a narrow need. Combining programs has its own rules, which we covered in an earlier insight on stacking.

Tax treatment differs between grants and loans

The two kinds of support may not be taxed the same way. Under paragraph 12(1)(x) of the Income Tax Act, government assistance is generally counted as income unless it has reduced the cost of a property or an expense. Department of Finance explanatory notes describe an exception for an “excluded loan”, which is a bona fide loan that is not forgivable.

If your firm also claims SR&ED, the Canada Revenue Agency’s policy applies the same rules to assistance received indirectly from a government organization. How a particular contribution is treated depends on the facts and the agreement. Surbiton does not give tax advice. Take this question to your accountant before you sign.

How to make the choice

Start with the need, not the program. If the problem is a payroll gap over the next year, the liquidity portion fits. If you have a pivot project of about $2 million or less, the 50% non-repayable share may be enough. For a larger project, compare the 75% repayable share against a BDC loan or your own bank.

Then put numbers on each option. Build a three-year cash flow for each one, including repayments and your own share. A financial model a lender will believe works just as well for a funder. Keep the dates in view: liquidity support ends by March 31, 2028, and pivot projects must be completed by March 31, 2029. Nation-owned businesses and development corporations should ask PacifiCan directly which terms apply to them.

This week, list your tariff-related costs and sort them into payroll, pivot and maintenance. Then book an hour with your accountant on tax treatment. Our Funding & Grants practice can help you set up the comparison.

Sources

1. “B.C. businesses can now access expanded support through the Regional Tariff Response Initiative”, Pacific Economic Development Canada, Government of Canada. https://www.canada.ca/en/pacific-economic-development/news/2026/09/bc-businesses-can-now-access-expanded-support-through-the-regional-tariff-response-initiative.html
2. “Regional Tariff Response Initiative (RTRI)”, Canadian Federation of Independent Business. https://www.cfib-fcei.ca/en/tools-resources/regional-tariff-response-initiative-rtri
3. “Support for Canadian workers and businesses affected by U.S. tariffs”, Department of Finance Canada. https://www.canada.ca/en/department-finance/news/2026/08/support-for-canadian-workers-and-businesses-affected-by-us-tariffs.html
4. “Regional Tariff Response Initiative in British Columbia: Eligible applicants”, Pacific Economic Development Canada, Government of Canada. https://www.canada.ca/en/pacific-economic-development/services/funding/regional-tariff-response-initiative/rtri-eligible-applicants.html
5. “Regional Tariff Response Initiative: Applicant Guide for Businesses”, Pacific Economic Development Canada, Government of Canada. https://www.canada.ca/en/pacific-economic-development/services/funding/regional-tariff-response-initiative/rtri-business-applicant-guide.html
6. “Regional Tariff Response Initiative in British Columbia: Frequently asked questions (FAQs)”, Pacific Economic Development Canada, Government of Canada. https://www.canada.ca/en/pacific-economic-development/services/funding/regional-tariff-response-initiative/rtri-faq.html
7. “Regional Defence Investment Initiative in British Columbia: Funding overview”, Pacific Economic Development Canada, Government of Canada. https://www.canada.ca/en/pacific-economic-development/services/funding/regional-defence-investment-initiative/rdii-funding-overview.html
8. “Prime Minister Carney and Premier Ford launch new action plan to protect workers from tariffs and strengthen Ontario industries”, Prime Minister of Canada. https://www.pm.gc.ca/en/news/news-releases/2026/10/21/prime-minister-carney-and-premier-ford-launch-new-action-plan-protect
9. “New Tariffs, Tighter Cash Flow: BDC Expands Pivot to Grow”, Business Development Bank of Canada. https://www.bdc.ca/en/about/mediaroom/news-releases/new-tariffs-tighter-cash-flow-bdc-expands-pivot-to-grow
10. “PacifiCan’s 2026–2027 Departmental Plan: Supplementary Information Tables”, Pacific Economic Development Canada, Government of Canada. https://www.canada.ca/en/pacific-economic-development/corporate/transparency/departmental-plans/2026-2027-departmental-plan/supplementary-tables.html
11. “Explanatory Notes Relating to the Income Tax Act and Other Legislation”, Department of Finance Canada. https://fin.canada.ca/drleg-apl/2024/nwmm-amvm-0424-n-2-eng.html
12. “Assistance and Contract Payments Policy”, Canada Revenue Agency. https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/assistance-contract-payments-policy.html