Québec businesses default on federal loans, costing taxpayers $25 million

Canada Economic Development for Québec Regions, a federal agency, has taken a risk-tolerant approach to approving loans to Québec businesses, boasting that it is "prepared to support riskier projects" in pursuit of regional economic benefits.

However, records show that this approach has come at a significant cost to taxpayers. Since 2019, 104 borrowers have defaulted on their loans, resulting in $24.8 million in write-offs.

Blacklock's Reporter says according to a briefing note, "Despite thorough assessment of funding applications, it sometimes happens that businesses receiving funding can run into financial difficulties." This can lead to businesses being unable to repay their loans or complete their projects, forcing them to seek protection under the Bankruptcy and Insolvency Act.

The agency defended its approach, stating that it attempts to share the risk with other funding partners and implements measures to mitigate risk, such as more frequent monitoring or accepting security like mortgages.

However, the briefing note made no mention of taxpayer tolerance for losses. Instead, it emphasized that "the government shares the risks with other partners and ensures that mitigation measures are put in place if necessary."

The terms of the agency's loans and grants are confidential, but it is known that the agency provided a $10.6 million subsidy to the Montréal organizers of ComediHa! in 2024, following the bankruptcy of the Just For Laughs festival in May 2023.

The agency justified the funding, stating that it supports festivals that generate sustainable economic benefits and attract tourists from outside Québec.