Funding Fact-Sheet: The Canada Small Business Financing Program




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Written by David Loretta

Category: Free Downloads, Funding & Financing

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Financing is often the sole catalyst responsible for whether an idea remains a dream or turns into a prosperous business. It is critical to both startups and growing businesses, and its number one on the list when you ask entrepreneurs about their business needs.

Enter the Canada Small Business Financing Program.

Quick Search Guide hide
1 Download the Fact-Sheet!
2 The Canada Small Business Financing Program
2.1 What’s the difference between a loan and Government Guaranteed Loan?
2.2 Traditional Loan vs. Government Guaranteed Loan
3 Download the Fact-Sheet!

 Download the Fact-Sheet!

    The program has been around – in one form or another – since 1961, when it was called the Small Business Loans program. This program is the Canadian Government’s answer to the cries of small business owners nation-wide faced with a shortage of financial resources.

    The Canada Small Business Financing Program, otherwise referred to as The CSBF or CSBFP, aims to provide entrepreneurs with financing to start, expand, modernize or improve their businesses through government guaranteed loans up $1 Million.

    The Canada Small Business Financing Program

    The Canada Small Business Financing Program (CSBFP) is designed to help small businesses in Canada secure financing. Here are some key facts about this program:

    1. Objective: The CSBFP aims to increase the availability of loans for establishing, expanding, modernizing, and improving small businesses in Canada.
    2. Eligibility: It is available to small businesses operating for profit in Canada, with gross annual revenues of $10 million or less. Not all businesses are eligible; for instance, farming businesses are not covered under this program.To see if you are eligible for this program, you can access the Funding Database and work with the Canada Startups experts to unlock your potential.
    3. Loan Uses: Loans can be used for various purposes, including the purchase or improvement of land, real estate, equipment, and for certain types of leasehold improvements.
    4. Maximum Loan Amount: The maximum amount that can be financed under the program is $1,000,000. Of this, a maximum of $350,000 can be used for leasehold improvements or to purchase or improve equipment.
    5. Lenders: Loans are made by financial institutions (banks, credit unions, etc.). The government of Canada shares the risk with the lenders.
    6. Interest Rates: The interest rates can be either fixed (maximum of the lender’s single family residential mortgage rate plus 3%) or variable (maximum of the lender’s prime lending rate plus 3%). There is also an option of a floating interest rate.Review the Funding Database to see over 1,500 different government funding options across Canada, including grants, government loans and tax options.
    7. Fees: A registration fee of 2% of the total amount loaned under the program is required. This fee can be financed as part of the loan.
    8. Loan Term: The maximum term for the loan is typically 10 years. Loans for real estate may have longer terms.
    9. Guarantee: The Government of Canada guarantees 85% of the loan. However, the borrower remains responsible for the full amount of the loan.
    10. Application: Small businesses must apply for the loans through a financial institution, which then submits the application to the government for approval.

    The CSBFP is a critical component of the Canadian government’s effort to stimulate small business growth and economic development. It helps to address the gap in the market for small business financing by sharing the risk with lenders.

    What’s the difference between a loan and Government Guaranteed Loan?

    When asked which they would prefer between a grant and a loan, the vast majority will say a Grant; and for good reason. Grants are essentially free money that doesn’t need to be reimbursed. However, the savvy entrepreneur might think otherwise. Due to their nature, grants are sparse, require you to meet more criteria and generally involve more work in order to be accepted. On the other hand, a Government Guaranteed loan offers business owners a very reasonable middle-ground alternative to the average grant or loan.

    Traditional Loan vs. Government Guaranteed Loan

    Unlike a traditional loan, a government guaranteed loan is backed by the government. Meaning that in the unfortunate event that your business fails, the government pays up to 85% of the eligible losses incurred, leaving you responsible for only 15%. Now doesn’t that sound a lot more manageable and less terrifying? Even more convenient, is the process. You can apply for the program right at your local bank branch, and get to avoid the lengthy applications and approvals process associated with most government financing. So you could potentially apply today, and have the money tomorrow. It doesn’t get easier than that!

    Want to know more about the Canada Small Business Financing Program?

     Download the Fact-Sheet!

      Fact-sheet will contain the full details on where and how to apply as well as additional information on what you can use the funds for.

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