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Business | 18 January, 2024

How to Secure the CSBFL

How to Secure the CSBFL

Seeking essential funding to start, grow, or sustain operations can be challenging for small businesses in Canada. This is where the Canada Small Business Financing Program (CSBFP) plays a pivotal role. 

To ease the acquisition process for Canada small business loans, the CSBFP loan significantly contributes to the financial stability and growth of small enterprises in diverse sectors, excluding farming businesses.

In the past decade alone, the CSBFP Program has been instrumental in facilitating over 53,000 loans, amounting to a staggering $10 billion, demonstrating its substantial impact on the Canadian small business landscape.

Hence, understanding the program’s terms, eligibility criteria, and CSBFP application process is crucial for Canadian small businesses seeking financial support. This blog aims to guide you through these aspects, helping you secure the necessary funding for this business loan in Canada to propel your business forward in the dynamic market.


CSBFL Program 

The Canada Small Business Financing Loan’s primary purpose is to make loans more accessible to small businesses and startups across the country. Unlike other Canadian small business loans, this financing program shares the risk with lenders, thereby encouraging financial institutions to extend loans to smaller enterprises that might otherwise be deemed too risky.


CSBFP Guidelines and Eligibility

The Canadian Small Business Financing Program guidelines detail how the CSBFL is tailored for small businesses or startups operating in Canada, specifically those with gross annual revenues of $10 million or less. 

This inclusivity allows a broad range of small businesses to apply for financial support. It’s important to note that farming businesses are not eligible under this program, but they can explore options like the Canadian Agricultural Loans Act Program.


Available New Business Financing

Under the program, the maximum loan amount per borrower is capped at $1.15 million, which is subdivided into two main categories:

  • Term Loans: Up to $1,000,000 for any one borrower, with a limit of $500,000 for purchasing leasehold improvements or equipment. Of this, a maximum of $150,000 can be used for intangible assets and working capital costs.
  • Lines of Credit: A maximum of $150,000 to address the business’s day-to-day operational expenses.


CBFP Interest Rate, Fees, & Financing Terms

As a business financing loan, the interest rates for term loans under the CSBFP are determined by the lending institutions and can be either floating or fixed. For lines of credit, the maximum chargeable rate is 5%  plus the lender’s prime lending rate.

Additionally, the program requires a 2% registration fee, which can be financed, reducing the initial financial burden on the borrower.

Lenders under this small business financing program can opt to take an unsecured personal guarantee. However, for specific financed items like real property and equipment, security must be taken on the assets. This requirement ensures that both the lender and borrower have a vested interest in the success of the financed assets.


Small Business Loan Application 

The journey to obtaining a small business financing loan under the CSBFP is facilitated exclusively by financial institutions, which bear the responsibility of loan approval. To secure essential financing, small businesses should be aware of the following Canada business loan process:

  • Initiating the Process: Begin by engaging with a financial officer at any bank, caisse populaire, or credit union in Canada. This initial step is crucial as it sets the stage for your loan application under the CSBFP.
  • Business Proposal Evaluation: Present your business proposal to the financial officer. The proposal should comprehensively outline your business needs and how the CSBF loan will support your goals. The financial officer will meticulously assess your proposal to determine the viability and potential of your business plan.
  • Decision and Disbursement: Following the review, the financial institution will decide on your loan application. If approved, they will proceed to disburse the funds required for your business activities. The money funded is that of the financial institution itself and not from the government.
  • Finalizing the Loan: The last step involves the registration of your loan with the Innovation, Science and Economic Development Canada (ISED). This formalizes your loan under the CSBFP, marking the completion of the application process.


Bottom Line

The Canada Small Business Financing Program serves as a key resource in the Canadian financial landscape, specifically designed to facilitate easier access to loans for small businesses and startups. The CSBFP’s objective further supports the financial foundation and growth potential of small businesses across Canada.


By unlocking access to vital funding, this program empowers entrepreneurs to invest in various aspects of their operations. Offering businesses the means to innovate, expand, and thrive in the competitive Canadian market, securing the CSBFP ultimately contributes to the broader economic prosperity of the country.