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How the Canada Small Business Financing Program Works

How the Canada Small Business Financing Program Works

Small businesses play a crucial role in Canada’s economy, yet they often face heightened vulnerability to economic fluctuations and technological disruptions, which are persistent challenges. Against this backdrop, the pressure on small businesses to adapt and innovate within Canada’s broader green and digital transformations is mounting. It’s essential to prioritize implementing robust financial, operational, and regulatory support mechanisms to enhance the resilience of small businesses, particularly micro and scale enterprises.

 

As of December 2022, there were 1.21 million employer businesses in Canada. Of these, 1.19 million (97.9%) were small businesses, 22,700 (1.9%) were medium-sized businesses, and 2,868 (0.2%) were large businesses2.

2 https://ised-isde.canada.ca/site/sme-research-statistics/en/key-small-business-statistics/key-small-business-statistics-2022

 

small business statistics

 

The data presented in this report underscore the vital role of government support in sustaining small businesses and facilitating their inclusive recovery and expansion.

 

With this gap, the Government of Canada has taken steps to mitigate it by establishing a government loan for small business. This initiative aims to alleviate the challenges faced by small businesses nationwide, offering support to navigate their growth trajectory more effectively.

 

The Canada Small Business Financing Program (CSBFP) or the Canadian Small Business Financing Loan (CSBFL loan) is a form of guaranteed business loans offered by major Canadian financial institutions, with up to 85% of the loan amount guaranteed by the Canadian government. This means that if a small to medium-sized business is unable to repay the loan, the government will cover up to 85% of the outstanding balance to the bank.

 

Amount of Loan to Start a Small Business

The Canadian Small Business Loan or CSBF loan provides access to loan financing for the establishment, expansion, and improvement of small businesses, offering up to $1,150,000 in total financing, including $150,000 for a new line of credit. Specifically, financing is available up to $500,000 for leasehold improvements and equipment, with $150,000 now designated for intangible assets and working capital costs, and up to $1,000,000 for real property.

 

CSBFP loans are subject to a 2% government registration fee, which can be included in the maximum allowable loan amount.

 

How to Get a Business Loan Canada

This federal government program is accessible in all provinces and territories through a network of Financial Institutions, including chartered banks, credit unions, and caisses populaires. Business owners must present their business plan directly to a financial institution to apply for Canadian small business loans, with lending decisions solely at the discretion of the lenders. Searching for terms such as “small business loan BC,” “business loan government of Canada,” “small business loan Quebec,” “small business loans Quebec,” “equipment financing for startups Manitoba,” “small business loans Manitoba,” “how to get a business loan in BC,” “small business loans Saskatchewan”, and “small business loans Ontario” will direct you to the Canada Small Business Loan Program or the CSBFL loan.

 

How the Canada small business financing program works

 

CSBFL Guidelines

Participating businesses should take note of the following costs associated with using CSBFP:

 

Registration Fees: Small businesses will be required to pay 2% of the loan’s total value to participate in the program. This fee can be financed as part of the loan.

 

Interest Rates: The interest rates are determined by the financial institution. Lenders may offer either a variable or fixed interest rate.

 

CSBFP interest rate or CSBFL  loan interest rate

Variable: Lender’s prime rate + 3%

 

Fixed: Lender’s single-family residential mortgage rate + 3%

 

Lender Fees: Depending on the lender, there may be additional fees to establish this loan for small business. However, these fees cannot be financed through the business’ loan.

 

Small Business Loan Canada Eligibility

To qualify for small business financing program funding, businesses must meet the following criteria:

  • Operate and maintain assets within Canada.
  • Offer products or services to Canadian customers.
  • Operate as a for-profit entity.
  • Maintain an annual revenue of $10 million or less.

 

Ineligible Businesses

Certain types of businesses are ineligible for participation in the small business loans Canada program or CSBFP, including:

  • Agricultural producers.
  • Charitable or religious organizations.
  • Not-for-profit organizations.

 

Are you eligible for a loan for business in Canada

Canada Small Business Loans or CSBFP small business loans are designed to support expansion projects for startups and small businesses operating within Canada. Eligible projects include:

  • Purchase or enhancement of commercial land or buildings.
  • Acquisition or enhancement of new or used equipment.
  • Leasehold improvements, such as renovations to leased property.

 

Projects ineligible for small business financing Canada

Certain projects do not qualify for Canadian business loans through CSBFP. These include:

  • Inventory purchases.
  • Research and development initiatives.
  • Goodwill development.
  • Working capital extension.
  • Franchising fee payments.

 

Eligible expenses for Canada business loans through CSBFP

Applicants to the program can include the following expenses in their small business loan application:

  • Architecture, engineering, or design costs
  • Display cases
  • Fences
  • Landscaping related to leasehold improvements
  • Water and drainage systems
  • Parking lot development and paving
  • Sidewalks for business access
  • Production mold development
  • Fees for dies and jigs
  • Contractor profits (if separately detailed on their invoice)

Note: This list is not exhaustive; your business expenses may be eligible for a guaranteed small business loan as long as they are not among the ineligible expenses listed below.

 

Ineligible Expenses

The following costs are not eligible for new business loans Canada through CSBFP:

  • Labor provided by the borrower.
  • Expenses already financed through other instruments.
  • Purchase of shares in another company.
  • Assets acquired through exchanges or bartering.

 

We are here to assist you

If you are running a startup or an early-stage business, and you are confident that your business is eligible for the CSBFP or CSBFL, we’re ready to help. Schedule an appointment today to discuss your financing needs.

Business Plan - Request a Quote

  • Drop files here or
    Max. file size: 64 MB.

    Small businesses play a crucial role in Canada’s economy, yet they often face heightened vulnerability to economic fluctuations and technological disruptions, which are persistent challenges. Against this backdrop, the pressure on small businesses to adapt and innovate within Canada’s broader green and digital transformations is mounting. It’s essential to prioritize implementing robust financial, operational, and regulatory support mechanisms to enhance the resilience of small businesses, particularly micro and scale enterprises.

     

    As of December 2022, there were 1.21 million employer businesses in Canada. Of these, 1.19 million (97.9%) were small businesses, 22,700 (1.9%) were medium-sized businesses, and 2,868 (0.2%) were large businesses.

    small business statistics
    The data presented in this report underscore the vital role of government support in sustaining small businesses and facilitating their inclusive recovery and expansion.

     

    With this gap, the Government of Canada has taken steps to mitigate it by establishing a government loan for small business. This initiative aims to alleviate the challenges faced by small businesses nationwide, offering support to navigate their growth trajectory more effectively.

     

    The Canada Small Business Financing Program (CSBFP) or the Canadian Small Business Financing Loan (CSBFL loan) is a form of guaranteed business loans offered by major Canadian financial institutions, with up to 85% of the loan amount guaranteed by the Canadian government. This means that if a small to medium-sized business is unable to repay the loan, the government will cover up to 85% of the outstanding balance to the bank.

     

    Amount of Loan to Start a Small Business

    The Canadian Small Business Loan or CSBF loan provides access to loan financing for the establishment, expansion, and improvement of small businesses, offering up to $1,150,000 in total financing, including $150,000 for a new line of credit. Specifically, financing is available up to $500,000 for leasehold improvements and equipment, with $150,000 now designated for intangible assets and working capital costs, and up to $1,000,000 for real property.

     

    CSBFP loans are subject to a 2% government registration fee, which can be included in the maximum allowable loan amount.

     

    How to Get a Business Loan Canada

    This federal government program is accessible in all provinces and territories through a network of Financial Institutions, including chartered banks, credit unions, and caisses populaires. Business owners must present their business plan directly to a financial institution to apply for Canadian small business loans, with lending decisions solely at the discretion of the lenders. Searching for terms such as “small business loan BC,” “business loan government of Canada,” “small business loan Quebec,” “small business loans Quebec,” “equipment financing for startups Manitoba,” “small business loans Manitoba,” “how to get a business loan in BC,” “small business loans Saskatchewan”, and “small business loans Ontario” will direct you to the Canada Small Business Loan Program or the CSBFL loan.

    How the Canada small business financing program works
    CSBFL Guidelines

    Participating businesses should take note of the following costs associated with using CSBFP:

     

    Registration Fees: Small businesses will be required to pay 2% of the loan’s total value to participate in the program. This fee can be financed as part of the loan.

     

    Interest Rates: The interest rates are determined by the financial institution. Lenders may offer either a variable or fixed interest rate.

     

    CSBFP interest rate or CSBFL  loan interest rate

    Variable: Lender’s prime rate + 3%

     

    Fixed: Lender’s single-family residential mortgage rate + 3%

     

    Lender Fees: Depending on the lender, there may be additional fees to establish this loan for small business. However, these fees cannot be financed through the business’ loan.

     

    Small Business Loan Canada Eligibility

    To qualify for small business financing program funding, businesses must meet the following criteria:

    • Operate and maintain assets within Canada.
    • Offer products or services to Canadian customers.
    • Operate as a for-profit entity.
    • Maintain an annual revenue of $10 million or less.

     

    Ineligible Businesses

    Certain types of businesses are ineligible for participation in the small business loans Canada program or CSBFP, including:

    • Agricultural producers.
    • Charitable or religious organizations.
    • Not-for-profit organizations.

     

    Are you eligible for a loan for business in Canada

    Canada Small Business Loans or CSBFP small business loans are designed to support expansion projects for startups and small businesses operating within Canada. Eligible projects include:

    • Purchase or enhancement of commercial land or buildings.
    • Acquisition or enhancement of new or used equipment.
    • Leasehold improvements, such as renovations to leased property.

     

    Projects ineligible for small business financing Canada

    Certain projects do not qualify for Canadian business loans through CSBFP. These include:

    • Inventory purchases.
    • Research and development initiatives.
    • Goodwill development.
    • Working capital extension.
    • Franchising fee payments.

     

    Eligible expenses for Canada business loans through CSBFP

    Applicants to the program can include the following expenses in their small business loan application:

    • Architecture, engineering, or design costs
    • Display cases
    • Fences
    • Landscaping related to leasehold improvements
    • Water and drainage systems
    • Parking lot development and paving
    • Sidewalks for business access
    • Production mold development
    • Fees for dies and jigs
    • Contractor profits (if separately detailed on their invoice)

    Note: This list is not exhaustive; your business expenses may be eligible for a guaranteed small business loan as long as they are not among the ineligible expenses listed below.

     

    Ineligible Expenses

    The following costs are not eligible for new business loans Canada through CSBFP:

    • Labor provided by the borrower.
    • Expenses already financed through other instruments.
    • Purchase of shares in another company.
    • Assets acquired through exchanges or bartering.

     

    We are here to assist you

    If you are running a startup or an early-stage business, and you are confident that your business is eligible for the CSBFP or CSBFL, we’re ready to help. Schedule an appointment today to discuss your financing needs.

    Business Plan - Request a Quote

    • Drop files here or
      Max. file size: 64 MB.