How to finance your defence projects with BDC

In a fast-changing global landscape, Canada is seeking to strengthen its national defence sector and foster a more innovative, resilient, competitive and sustainable defence industrial base.

Guided by this objective, we have announced increased support for the defence sector, in alignment with the Government of Canada’s Defence Industrial Strategy. This support includes our new Defence Platform, through which BDC will provide up to $6 billion in financing, investments and advisory services.

Many defence companies are already benefiting from BDC support, and the new platform will help us increase our support for the sector.

Our goal is to work with a variety of partners to develop Canada’s ecosystem of security and defence SMEs.

Financing tailored to the defence sector’s long procurement cycles

Procurement cycles in the defence sector are often longer and more complex than those in other industries.

Before you receive payment for a sale or purchase order, you must often invest heavily to:

• obtain certifications and ensure regulatory compliance;
• hire workers to fill large orders;
• upgrade your facilities and equipment to support growth in production;
• develop new technologies;
• purchase raw materials;
• meet the requirements of technical calls for tenders.

Our working capital solutions are designed to support your growth without long payment cycles risking your everyday cash. They offer longer amortization periods and principal payment holidays of up to 24 months.

For growing businesses that need a patient lender to maximize investments today, we offer customized solutions such as mezzanine financing and quasi-equity financing. These solutions protect your cash flow with interest-only payments over the term of the loan, or a combination of interest and variable return and a lump-sum payment at maturity. They can also be combined with disbursement in installments, where funds are released as your project progresses, helping you reduce interest expenses before the project becomes operational.

Finance the growth of your production capacity

With demand running high, many businesses need to increase their production capacity. Our financing solutions are tailored to large-scale projects, whether your needs involve working capital, equipment acquisition, automation, or the expansion or construction of commercial buildings.

For real estate purchases, we can offer you a flexible financing structure, including an amortization period of up to 25 years, a principal payment holiday of up to 36 months, and a higher financing percentage that can help cover related costs and reduce your down payment.

With our LIFT program, we can also finance investments that make you more efficient through the adoption of technologies developed in Canada, including artificial intelligence (AI), automation, and state-of-the-art equipment. Financing and advisory services at preferred rates are also available to support these initiatives.

Support for innovation

Accelerating the transition between research and development and going to market is another key challenge faced by the defence sector.

Significant investments must often be made in products, services and technologies with dual-use or military applications long before they are ready for market adoption. This is a high-risk phase in which traditional financing may be difficult to obtain.

As the country’s most active venture investors, we launched the StrongNorth Fund, which invests in innovative start-ups that develop technologies with defence or dual-use applications or strategies. We also invest in private funds aligned with Canada’s defence priorities.

This capital is deployed to accelerate the development of critical technologies right here at home. Through direct and indirect investments and initiatives to strengthen the defence sector ecosystem, we aim to foster national sovereignty and encourage the growth of innovative businesses.

Who in the defence sector can receive BDC support?

Our support for the sector focuses on supply chains and direct sales to Canadian entities and their allies. Priority will be given to businesses that operate in or wish to explore areas critical to national security, including:

• Aerospace
• Specialized manufacturing
• Ammunition
• Digital systems
• In-service support
• Personnel protection
• Sensors
• Space
• Training and simulation
• Uncrewed and autonomous systems

Dual-use strategies

There are also large opportunities for companies in related sectors that want to apply their skills to meet defence sector needs, especially if their technologies have both civilian and military applications. For example, specialized manufacturers can help fill a void by providing parts needed for defence technologies.

Whether your company is already active in the defence sector or only at the exploration stage, we can provide support tailored to your needs, from the identification of opportunities through to execution.

For example, our Advisory Services client partners, can help you position yourself in the industry. We also offer complementary support to help you maximize your investments, including certification assistance, operational optimization, financial planning, project management and growth strategies. These services can also be financed and offered at preferred rates.

A dedicated team with experience in the defence and security sector

In defence, every detail counts: stringent requirements, security protocols, compliance, rigorous technical standards, and some of the country’s most complex procurement processes.

That is why we have set up an experienced field team dedicated to defence, including account managers, advisory services client partners and defence sector experts with direct experience in the armed forces and sector businesses.

Our team can provide support as you explore and grow within the sector, helping you translate the ecosystem’s complex needs into an effective business strategy.

Contact us

Would you like to discuss your defence projects? Fill out a form to contact our dedicated team and explore the options. You can also write to us to connect with our investment teams.