Are there interest-free or subsidized business loans in Canada?

If you are asking which business loan is interest free, the short answer from the federal programs checked here is that very few are. The two loan programs below for small businesses and farms work through a lender, and the loans carry interest. What the government does is back the lender against losses. One federal program does pay interest for the borrower, but it is limited to agricultural producers.

Small business loans carry a rate of interest

Under the Canada Small Business Financing Program, the lender and the borrower must sign a document that sets out the rate of interest. For a term loan that happens on or before the first disbursement, and for a line of credit it happens before the line opens. The program’s guidelines also refer to a regulation that limits the rate, so the program is a rate-capped loan, not an interest-free one. The guidelines make businesses engaged in farming, as defined in Statistics Canada’s 1980 Standard Industrial Classification, ineligible.

Where the government does pay interest

Agriculture and Agri-Food Canada describes the Advance Payments Program as a federal loan guarantee program giving agricultural producers low-cost cash advances. The Government of Canada pays the interest on the first part of a producer’s advance, up to an interest-free limit. The department says the limit has changed for recent program years, so read its page for the current limit. Agriculture and Agri-Food Canada says producers repay as they sell the agricultural products, with up to 18 months for most commodities.

A guarantee is not a subsidy

The Canadian Agricultural Loans Act program is described as a loan guarantee program meant to increase the availability of loans to farmers and agricultural co-operatives. The guarantee runs to the lender. It improves access to credit; it is not described as an interest payment. Ask each lender what rate sits in the loan documents. For general guidance on rates, see what determines the interest rate on a business acquisition loan.