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Unlocking Canadian defence sector funding: What defence and dual-use companies need to know

October 7, 2026

Erin Best, Megan Kieley and Alexander Crocker

With the federal government’s Defence Industrial Strategy in place and NATO commitments encouraging a surge in domestic capability, Canada’s defence funding landscape has changed dramatically. There is new, more accessible, well-funded support for Canadian businesses building for the national defence sector. That said, the details matter: many of these programs are still being developed, while others are revised versions of existing programs. There is reason for optimism, tempered by a realistic view of development timelines and cashflow.

Below are some relevant funding sources (current as of the time of publication) to Canadian businesses, an explanation of what each program funds and to what degree, and what applicants should demonstrate to succeed. As this piece is being delivered following the Maritime & Arctic Security and Safety (“MASS”) Conference in St. John’s and DEFSEC Atlantic in Halifax, programs for companies in Atlantic Canada are noted at the outset, though similar regional development opportunities exist across the country.

1. ACOA — Regional Defence Investment Initiative (RDII)¹

The Atlantic Canada Opportunities Agency’s RDII supports four categories of activity: ²

Innovation and R&D — developing military or adapting dual-use technologies
Productivity and scale-up — modernizing facilities and equipment
Supply-chain integration — meeting certification standards and connecting with major contractors
Ecosystem growth — strengthening regional infrastructure and expertise

Under RDII, ACOA intends to deliver $38.2 million over a three-year period. The program can fund up to 75% of eligible costs for commercial projects; up to 90% for non-commercial projects; and, up to 100% for projects involving Indigenous entities. Eligible costs for funding may include capital costs, labour, commercialization costs, costs to meet military certifications and others, however costs must be reasonable and necessary to qualify.³

While open to applicants across sectors, funding is likely to favour business-led projects that strengthen Canada’s defence needs and industrial capacity, including those that may align with Canada’s ten Key Sovereign Capabilities — which span aerospace, digital systems, uncrewed platforms, space, and more⁴ — and deepen integration into defence supply chains. Meaningful Indigenous inclusion and engagement and alignment with the Buy Canadian Policy may also strengthen applications.

2. BDC — StrongNorth Fund⁵

The Business Development Bank of Canada’s newly launched $500-million venture capital program⁶ targets early-stage Canadian start-ups already operating in the defence sector, as well as those with dual-use technologies or strategies adaptable to defence applications.⁷

Opportunities under BDC’s defence platform and the StrongNorth Fund are ongoing. Key areas of focus include AI, autonomy, cyber, secure communications, space, intelligence, surveillance and reconnaissance (ISR), and advanced materials and energy,⁸ although the fund remains flexible and mission-driven, supporting strong, high-quality projects that promise tangible, long-term value and impact.⁹

3. DND — Innovation for Defence Excellence and Security (IDEaS)¹⁰

The Department of National Defence’s IDEaS program funds innovation through defence and security challenges to suppliers — specific calls for proposals targeting defined capability gaps and project requirements.¹¹ The program looks for both tech and non-tech solutions in their challenges, with each challenge having its own unique eligibility and elements for innovators to meet.

IDEaS funding elements ensure innovators have the resources to help shape defence and security capability. The program supports innovators at every stage of development, from initial research and development through to prototyping, testing, and commercialization.¹²

Successful ideas advance through phases, with funding available at each stage. Recent challenges have sought AI solutions for multi-sensor fusion workflows and AI-driven repurposing of urban infrastructure as passive sensing networks.¹³

Notably, funding does not necessarily have to be repaid even if a project does not return the intended results, as the IDEaS program considers the insights and knowledge generated along the way to be valuable in their own right. The program sets no industry, regional, or size restrictions on eligibility; it instead looks across submissions of different sizes and selects whichever provides the best solution to fit national defence needs.¹⁴

4. DND – Mobilizing Insights in Defence and Security (MINDS)¹⁵

MINDS provides funding and resources to innovators through Targeted Engagement Grants¹⁶, which are currently open until the end of October 2026. Each grant provides up to $100,000 per defence and security related project submitted in response to Defence Policy Challenges.

Corporations and individuals based in Canada or internationally are eligible to apply, with calls for proposals issued twice a year, in the spring and fall. The program takes a multidisciplinary approach to defence and security, and applicants are encouraged to incorporate Buy Canadian principles into their project plans and proposals.¹⁷

The Defence Policy Challenges are updated regularly to align with Canada’s national security and defence policy objectives¹⁸ and have previously focused on strengthening Canada’s defence industrial base and partnerships. Each category reflects an issue where those operating in the defence and security sectors can offer relevant advice and collaboration.

5. NRC – Industrial Research Assistance Program (IRAP)¹⁹

The National Research Council’s IRAP is one of Canada’s most established innovation funding programs for the defence stream.²⁰ Through its Defence Industry Assist (“DI Assist”) initiative, the NRC provides advice, connections and funding to help small and medium-sized enterprises advance defence and dual-use technologies with military and civilian applications. DI Assist supports defence and dual-use technologies that meet the needs of the Canadian Armed Forces, align with Canada’s Defence Industrial Strategy, and have a clear path to commercialization.

Importantly, IRAP does not accept online applications — the process begins with an initial conversation with the IRAP contact centre, which may then lead to discussions with a client engagement advisor, assuming the business meets the eligibility criteria: being incorporated, for-profit, operating in Canada with a maximum of 500 employees, and developing and commercializing innovative, technology-driven products or services.²¹ Industrial Technology Advisors are then involved to help further the business’s vision and innovation potential and to offer targeted advice. The amount of project funding depends on each business’s proposed project and is not publicly available, although the Government of Canada has invested $241 million into the NRC IRAP. Funding is assessed by considering the technical merits of the innovation, the business’s management and financial capacity, the likelihood of success, commercialization plans, and the project’s market potential and benefits to Canada.

6. DND – Canadian Defence Industry Resilience (CDIR) Program

CDIR is the largest program on this list, with available funding of up to $700,000,000 per project.²² CDIR, managed by the Department of National Defence, funds Canadian businesses that expand domestic production capacity for sovereign defence capabilities and address supply chain vulnerabilities.

Eligible activities include enhancing production capacity, improving supply chains, maximizing Canadian content in existing supply chains, sustaining surge capacity, designing and constructing new capabilities, and increasing the availability of critical minerals.²³ Applicants must demonstrate corporate capability, hold or plan to hold the necessary IP rights, commit to meaningful Canadian supplier access, and align with both the Buy Canadian Policy and Canada’s Key Sovereign Capabilities.

7. EU — Security Action for Europe (SAFE)²⁴

SAFE is a European Commission loan program that funds defence procurement by EU Member States. The loans flow to EU governments, which then contract with eligible companies.²⁵ Canada is the primary non-European country permitted to participate in this program, and allows for unique opportunities for Canadian companies and products originating from Canada in procurement under the SAFE instrument.²⁶

Canada has a unique position with this program by virtue of a bilateral agreement with the EU that gives Canadian firms favourable access. The agreement allows Canadian content to comprise up to 80% of the total value of any SAFE-funding procurement (compared with previous threshold of 35% with other third countries), and Canadian contractors and suppliers receive the same treatment as European companies.²⁷

8. DSRB — Defence, Security & Resilience Bank

The Defence, Security & Resilience Bank is a proposed financial institution led by Canada,²⁸ targeted to be operational in 2027.²⁹ Modelled on the World Bank, it is a multilateral lending institution designed to meet the complex security needs of democratic nations, bringing together like-minded partners to mobilize and deploy private capital in support of collective security.³⁰

DSRB aims to modernize the defence sector within fiscal limits, strengthen and innovate supply chains, and enhance allied cooperation through joint financial responsibility.³¹ It will provide long-term, low-cost financing for defence, security, and resilience initiatives across supply chains, helping to address critical financing gaps and benefiting both member governments and defence firms, including small and medium-sized enterprises.³²

Common themes

Across all programs, a handful of themes consistently strengthen applications:

Theme	Why it matters
Canada’s Key Sovereign Capabilities	The ten capability areas define the government’s investment priorities, and alignment with them is either required or strengthens the likelihood of funding across several programs.
Buy Canadian Policy	Demonstrating Canadian-produced inputs in major construction and defence projects is now a baseline expectation.
Meaningful Indigenous Engagement	Concrete commitments to Indigenous participation — not nominal acknowledgement — are expected across funding programs and in work within the defence and security sectors.
Commercialization Pathways	A clear route to market is a recurring factor across several of the above programs, including RDII, IRAP, and IDEaS.
Dual-use and military/civilian Application	Framing a technology’s dual-use potential is a key, compelling factor across funding opportunities for the defence sector.

How Stewart McKelvey can help

Our team advises defence and dual-use technology companies at every stage of the funding process — from initial program assessment and eligibility analysis, through application strategy and documentation, to negotiating contribution agreements and managing ongoing reporting obligations. In addition, we assist companies with intellectual property protection, initial incorporation, Indigenous consultation, immigration, and labour & employment.

For additional insight into these funding programs, or to explore how Stewart McKelvey can support your business’ entry into the defence sector, please reach out to a member of our Defence & Security Group.

Thought Leadership

Unlocking Canadian defence sector funding: What defence and dual-use companies need to know

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