Manufacturers in southern Ontario often reach a point where business growth requires a significant investment.
A company may need new production equipment, automation, additional capacity, certifications or support entering a new market.
The business case may be sound, but the cost and timing of the investment can still make the project difficult to finance.
The Federal Economic Development Agency for Southern Ontario, commonly known as FedDev Ontario, provides funding programs to help established businesses make these investments.
FedDev Ontario is one of Canada’s regional development agencies and works with businesses and organizations to support innovation, community development and economic growth across southern Ontario.
As the agency’s name suggests, it is funded by the Government of Canada, but its administration is regional.
Manufacturers are often a strong fit because their projects can produce measurable improvements in productivity, production capacity, sales, exports and job creation.
FedDev Ontario funding can help businesses grow and compete, but it is generally intended for defined projects with clear economic outcomes, not ordinary operating expenses or routine equipment replacement.
As of August 2026, the principal FedDev Ontario funding options relevant to manufacturers are:
Funding for Businesses in Southern Ontario;
the Regional Tariff Response Initiative; and
the Regional Defence Investment Initiative, whose intake is currently paused.
Contact us to discuss your projects, initiatives, and goals:
Funding for Businesses in Southern Ontario
FedDev Ontario’s general business funding stream supports established companies undertaking substantial growth, commercialization, productivity or market expansion projects.
Who is eligible?
Eligible applicants generally include growing or established for-profit businesses, co-operatives and Indigenous businesses that:
are located and operating in southern Ontario;
have a minimum of five full-time employees;
have no more than 500 full-time equivalent employees overall; and
have been incorporated and registered to do business in Canada or Ontario for at least three years.
In practice, this means that the program is designed for operating companies with an established financial and employment history.
It is not normally a fit for a pre-revenue startup with only its founders working in the business.
What manufacturing projects can be supported?
The program supports three broad categories of activities.
The first is the development, commercialization or production of innovative products, processes and services.
This may include late-stage product development, operational demonstrations, market studies and process improvements that reduce the environmental impact of existing operations.
Basic research is not eligible. Product development projects are normally expected to be relatively close to market, generally within technology readiness levels 7 to 9.
The second category is productivity and capacity improvement. For a manufacturer, this could include:
adopting automation, robotics or digitized production systems;
purchasing or adapting advanced manufacturing equipment;
improving production efficiency;
increasing plant capacity;
introducing clean technologies;
making process improvements;
completing related facility enhancements; or
training employees to operate new equipment and production systems.
The third category is business expansion. Projects may involve launching a new product, integrating into domestic or international supply chains, entering new markets, reaching new customers or bringing production and technical capabilities back to southern Ontario.
A manufacturer installing an automated production line, for example, should explain more than the specifications and cost of the machinery.
The application should demonstrate how the investment will increase output, reduce unit costs, improve quality, support innovation, create or maintain jobs and generate additional sales.
What costs are eligible?
Eligible costs must be reasonable, verifiable, incremental and directly related to the proposed project. Depending on the project, costs may include:
machinery, equipment and production software;
installation of specialized equipment;
incremental employee salaries and benefits;
engineering, technical and other specialized expertise;
project management costs; and
renovations or leasehold improvements required for the installation of project equipment.
Costs associated with normal production or ongoing operations are not eligible.
Other common exclusions include purchasing land or buildings, basic and applied research, refinancing existing debt, routine capital replacement and expenses that are not directly connected to the approved activities.
Manufacturers should distinguish between a facility improvement required to install specialized equipment and a general building expansion.
Electrical work, foundations or ventilation needed for a new production line may form part of an eligible project.
Constructing a larger building without a direct connection to the funded equipment and activities is more difficult to justify.
Projects starting before the application is submitted should also be approached carefully.
Under the general business stream, costs incurred before submission are not eligible.
How much funding is available?
Businesses normally request between $125,000 and $10 million per project. Assistance is provided as an interest-free, repayable contribution rather than a grant.
FedDev Ontario normally contributes up to 50% of eligible project costs. Preference may be given to projects that require a lower percentage and have secured more financing from the applicant, lenders, investors or other sources.
Repayment normally begins one year after the project is completed. The repayment schedule is set out in the contribution agreement, and there is no penalty for early repayment.
Stacking federal, provincial and municipal assistance is generally limited to:
50% of eligible capital costs; and
75% of eligible non-capital costs.
A manufacturer requesting $1 million from FedDev Ontario would therefore normally require a project with at least $2 million in eligible costs and credible evidence that it can finance its share.
FedDev Ontario funding may sometimes be combined with other government programs, grants or tax credits, but all sources of government assistance must be disclosed.
Applicants should examine both the FedDev Ontario stacking limit and the rules of other programs before obtaining additional public funding for the same project.
Regional Tariff Response Initiative
The Regional Tariff Response Initiative, or RTRI, supports businesses dealing with tariff-related costs and trade disruption.
Its purpose is not to compensate companies for lost revenue. Instead, the program supports projects that help a business respond to the disruption by improving productivity, lowering costs, strengthening supply chains, expanding Canadian production or entering new markets.
Investment priority is given to businesses affected by tariffs, including companies in the steel, automotive and food security sectors. Other manufacturers may also be eligible if they can demonstrate a direct and measurable tariff impact.
Who is eligible?
An eligible business must generally:
be incorporated and operating for profit in southern Ontario;
have been registered to do business in Canada or Ontario for at least three years;
employ a minimum of five full-time equivalent employees in southern Ontario;
have fewer than 500 full-time equivalent employees overall; and
have been financially viable before the tariff disruptions and before March 21, 2025.
The business must also either:
generate at least 25% of its sales in markets targeted by the tariffs; or
demonstrate that tariffs, Canadian countermeasures or related trade disruption have negatively affected the company.
Evidence of an impact could include increased material or component costs, supply-chain delays, additional import or export taxes, declining exports, lost customers, reduced margins, layoffs or hiring freezes.
A general statement that tariffs have created uncertainty will not be enough. The application should be supported by financial information, supplier quotations, sales records, customer correspondence or other evidence showing how the company has been affected.
What activities can be supported?
An RTRI project must respond directly to the trade challenge facing the business. Eligible activities may include:
purchasing more productive or efficient equipment;
automating production to reduce costs;
digitizing manufacturing processes;
adapting production methods to use alternative materials;
qualifying new Canadian or international suppliers;
strengthening domestic supply chains;
increasing Canadian production capacity;
completing market diagnostics;
developing products for new markets;
participating in trade missions; or
diversifying sales away from a heavily affected export market.
The initiative can also support activities that bring research and development mandates, specialized expertise or highly qualified personnel to southern Ontario.
For example, a manufacturer facing higher imported component costs might invest in equipment that allows the component to be produced in Canada.
Another company might automate a labour-intensive process to remain competitive after tariffs increase the cost of its raw materials.
What costs are eligible?
Eligible expenses must be new, essential to the project and directly connected to the approved activities. Equipment, technology, incremental labour, expertise, market development and certain implementation costs may qualify.
Ineligible costs include land and building acquisition, entertainment, motor vehicles, debt refinancing and expenses that are unreasonable, non-incremental or unrelated to the project.
Unlike the general business funding stream, RTRI costs may be recognized retroactively for up to 12 months before FedDev Ontario receives the signed application.
No costs incurred before March 21, 2025 are eligible, and all projects must be completed by March 31, 2028.
Retroactive eligibility does not guarantee approval. Costs incurred before the company is formally notified of a funding decision remain at the applicant’s risk.
How much funding is available?
RTRI provides two funding options for businesses.
Repayable funding
Businesses can normally request between $125,000 and $10 million.
FedDev Ontario may contribute up to 75% of eligible project costs, with the applicant contributing at least 25%.
Non-repayable funding
Businesses can normally request between $125,000 and $1 million. FedDev Ontario may contribute up to 50% of eligible project costs, with the applicant contributing at least 50%.
To qualify for non-repayable support, the project must generate broader economic benefits.
These could include maintaining employment, strengthening an important regional supply chain, creating added value, preserving domestic production or supporting the economic base of a community.
A business can receive a non-repayable RTRI contribution only once during the life of the initiative.
Total federal, provincial and municipal assistance cannot normally exceed 90% of eligible project costs, although Indigenous-led projects may receive government assistance covering up to 100%.
Regional Defence Investment Initiative
The Regional Defence Investment Initiative, or RDII, supports companies entering or expanding within Canadian and allied defence supply chains.
The program is particularly relevant to manufacturers involved in aerospace, shipbuilding, advanced materials, sensors, cybersecurity, artificial intelligence, autonomous systems, specialized vehicles, personnel protection and critical minerals or metals.
The intake for businesses is currently paused. However, the program remains relevant to manufacturers planning a longer-term defence investment or preparing for a future intake.
Who is eligible?
Eligible businesses must be incorporated, located and operating in southern Ontario and employ at least five full-time equivalent employees in the region.
Applicants must already participate in defence supply chains or have a credible plan to enter them.
A project must address a demonstrated defence opportunity or military need and increase Canada’s industrial, technological or innovation capacity.
Dual-use products and technologies may qualify, but the military application must be clearly demonstrated. It is not enough to state that a commercial product could theoretically be used by the defence sector.
The applicant should identify the relevant defence customer, application, standard, procurement opportunity or capability requirement.
What activities can be supported?
Eligible activities may include:
digitization, automation and technology integration;
acquiring specialized manufacturing equipment;
expanding or modernizing production facilities;
obtaining certifications needed to compete for defence work;
developing commercialization and defence market-entry strategies;
adapting or improving technologies with civilian and military applications; and
completing late-stage product development for a defence application.
A manufacturer might, for example, obtain an aerospace or defence quality certification, purchase specialized machining equipment and qualify a component for a Canadian or allied defence supply chain.
How much funding is available?
Businesses can normally request between $125,000 and $10 million in interest-free, repayable funding.
FedDev Ontario may contribute up to 75% of eligible project costs, with the applicant and other sources providing at least 25%. Total government assistance may cover up to 100% of eligible costs.
Costs may be recognized retroactively for up to 12 months before receipt of the signed application, but no earlier than April 1, 2025. Approved projects must be completed by March 31, 2029.
What About Funding for Not-for-Profit Organizations?
FedDev Ontario also funds not-for-profit and community development organizations that help businesses grow, develop regional industries and deliver services to companies.
These organization-focused programs are different from funding awarded directly to an individual manufacturer.
A manufacturer may still benefit indirectly through an accelerator, industry association, innovation centre or other organization delivering a FedDev-supported program.
The Build Communities Strong Fund – Local Impact Stream is another separate FedDev Ontario initiative.
It supports incorporated not-for-profit organizations, Indigenous organizations, municipalities, local governments and business improvement areas undertaking community infrastructure projects designed to strengthen communities and local economies.
It is not a direct funding program for a private manufacturing company. Funding under the stream normally ranges from $125,000 to $1 million, is non-repayable and may cover up to 50% of eligible project costs.
At the time of writing, the summer 2026 intake is no longer accepting applications. Future intakes may be announced subject to program priorities and available funding.
What Makes a Strong FedDev Ontario Manufacturing Project?
FedDev Ontario does not fund equipment simply because a manufacturer wants newer machinery. The equipment is a means to an economic result.
A competitive project should connect each major cost to measurable outcomes such as:
increased production capacity;
reduced unit costs or lead times;
improved product quality;
commercialization of a new product or innovation;
increased Canadian content;
new domestic or export sales;
stronger supply-chain resilience;
reduced waste, energy use or emissions; and
jobs created or maintained.
The company must also demonstrate that it has the management team, technical expertise, financing and working capital needed to complete the project.
FedDev Ontario funding is generally reimbursed after approved expenses have been incurred and claimed.
A company must therefore be able to manage the project’s cash flow while it waits for reimbursement.
It must also confirm its sources of financing and sign a contribution agreement within the required period after being notified of approval.
Strong applications usually answer five practical questions:
What investment is the manufacturer proposing?
Why does the project need to proceed now?
What measurable economic results will it produce?
How will the company finance and manage the project?
Why is FedDev Ontario support needed for the investment to proceed at the proposed scale or pace?
FedDev Ontario funding can be valuable, but it works best for manufacturers that already have a defined project, a credible market opportunity and a realistic plan for financing their share.
Companies considering an application should review the current program information, confirm eligibility and contact FedDev Ontario before committing to major project costs.
Using a consultant to apply for FedDev Ontario funding
Companies may also choose to work with an experienced funding consultant when preparing a FedDev Ontario application.
These applications typically require more than a description of the equipment being purchased or the amount of funding requested.
A strong submission should clearly explain the business case for the project, identify the eligible activities and costs, demonstrate how the project aligns with FedDev Ontario’s priorities, and quantify the expected outcomes, such as increased production capacity, productivity gains, new sales, exports, job creation or supply-chain benefits.
A consultant can help organize this information into a clear and persuasive application, identify gaps before submission, and ensure that the project budget, timelines and expected results are presented consistently across the application and supporting documents.
This can be particularly useful for larger manufacturing projects involving multiple cost categories, financing sources or government funding programs.
Clean Conduit can assist manufacturers with preparing and writing FedDev Ontario funding applications, including project scoping, eligibility review, budget development, application writing, financial and project information gathering, and preparation of supporting materials.
Clean Conduit can also help position the project within a broader funding strategy where other grants, loans or tax credits may be available.
