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Business Discussions | 19 May, 2023

Small Business Loans Canada

The Canada Small Business Financing Program (CSBFP) is a loan loss sharing program administered by the Government of Canada to support small and medium-sized enterprises (SMEs) in obtaining financing for their business needs. Established in 1961, the program has undergone significant changes over the years to better reflect the needs of SMEs in today’s economy. 


The CSBFL works by sharing the risk of lending with financial institutions, allowing eligible SMEs to access loans that they may not have been able to obtain otherwise. To qualify for the CSBFP, borrowers must have annual revenues of $10 million or less.


The objectives of the program are to help new businesses get started, support established firms in making improvements and expanding, increase access to loans that might not otherwise be available to small businesses, and promote economic growth and job creation for Canadians. 


The loans available through the CSBFP are provided by qualified lenders such as chartered banks, and credit unions. They can be used to finance the purchase or improvement of land or buildings used for commercial purposes, new or used equipment, and the purchase of new or existing leasehold improvements.


The CSBFP has played a crucial role in providing financing to SMEs across Canada. It has registered 172,820 loans worth a total of $19.7 billion. The program has become an essential tool for SMEs seeking financial support, and it continues to evolve and improve. Recent changes have expanded the program’s offerings, providing lenders and small businesses with additional financing products, increased loan amounts and terms, improved loan conditions, and decreased administrative burden. It is potentially the greatest small business loan Canada.


One of the most significant changes to the CSBFP was the increase in the maximum loan amount from $1 to $1.15 million in 2022. This change was made to better reflect the needs of small businesses in today’s economy, where costs are higher than ever. The increase in the maximum loan amount allows small businesses to access more funding, which they can use to purchase equipment, renovate their facilities, or expand their operations.


The federal government has also expanded the eligibility criteria for the CSBFP. Previously, only businesses with less than $5 million in annual revenues were eligible for the program. However, in July 2022, the government increased the eligibility threshold to $10 million in annual revenues, allowing more small businesses to access financing through the program.


If you are a small business owner with annual sales below $10 million, you might qualify for this government loan. However, farming businesses, non-profits, charities, and religious organizations are not eligible. The program does not provide funds for financing goodwill, franchise fees, or research and development. Eligible expenses that can be financed by the program include land, buildings, and equipment used for business operations, commercial vehicles, machinery, and computer and telecommunications software. Additionally, tenant leasehold improvements up to $350,000 and the cost of purchasing a franchise may also be covered.


How does it work? To access the Canada Small Business Financing Program Guidelines, you should follow the regular loan application process with your chosen financial institution. During the application process, the lender will assess your eligibility for the program and determine which of your business assets are eligible for financing. Once the loan is approved, the lender will register it with the Canadian government to ensure it is covered by the program. This process enables lenders to share the risk of the loan with the government, which helps to encourage lending to small businesses that may have had difficulty obtaining financing otherwise.


If you are looking for small business financing Canada, there are numerous loan programs available for Canadian businesses through both federal and provincial governments. One important step is developing a CSBFP business plan to be presented to a Canadian financial institution. The Canada Small Business Financing Loan (CSBFL) holds significant importance as it provides essential support for small businesses by easing their access to loans through shared risk with the federal government of Canada. The Canadian small business loan’s main objective is to help small businesses obtain financing for their commercial property, equipment purchases, and leasehold improvements, making it a critical tool for Canadian SMEs seeking to grow or expand their operations.