Are You a Small or Medium-Sized Business Owner in Canada?

Running a small or medium-sized business in Canada can be challenging. With constant competition and rising customer demands, keeping up requires effort and money. Luckily, the Canada Small Business Financing Program (CSBFP) is here to support you. This program offers expanded financing options, including a line of credit, to help you start, support, and grow your business. In this article, we’ll break down everything you need to know about the CSBFP and how it can benefit your business.

What is the Canada Small Business Financing Program (CSBFP)?

The CSBFP is a government initiative designed to make it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. Over the past 10 years, the program has provided over 53,000 loans totalling $10 billion to small businesses across Canada.

Who is Eligible?

To qualify for the CSBFP, your business must:

• Be a small business or start-up operating in Canada.
• Have gross annual revenues of $10 million or less.

Note: Farming businesses are not eligible for this program but can explore the Canadian Agricultural Loans Act Program for similar support.

Available Financing Options

The CSBFP offers different types of financing to meet various business needs. Here’s what you can access:

Maximum Loan Amounts

• Total Maximum: $1.15 million
• Term Loans: Up to $1 million, with specific limits:
  • $500,000 for purchasing or improving leased property and equipment.
  • $150,000 for intangible assets and working capital costs.
• Lines of Credit: Up to $150,000.

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How to Apply for a CSBFP Loan

Applying for a CSBFP loan is straightforward. Financial institutions across Canada deliver the program and are responsible for approving loans. Here are the steps to apply:

1. Discuss Your Needs: Talk to a financial officer at any bank, credit union, or Caisse populaire. Present your business proposal and discuss your financing needs.
2. Loan Approval: The financial institution will review your proposal and decide on your loan application.
3. Disbursement and Registration: If approved, the funds will be disbursed, and the loan will be registered with Innovation, Science and Economic Development Canada (ISED).

What Can Be Financed?

You can use the CSBFP term loans to finance:

• Purchase or improvement of commercial land or buildings.
• Purchase or improvement of new or used equipment.
• Purchase of leasehold improvements (e.g., renovations to a leased property).
• Intangible assets and working capital costs.

Examples include:

• Commercial vehicles
• Hotel or restaurant equipment
• Computer or telecommunications equipment and software
• Production equipment
• Franchise purchase costs

Lines of credit can be used to cover day-to-day operating expenses.

Interest Rates and Fees

Interest rates and fees vary based on the type of loan:

Term Loans

• Floating Rate: Prime lending rate + 3%
• Fixed Rate: Residential mortgage rate for the loan term + 3%

Lines of Credit

• Interest Rate: Prime lending rate + 5%

Registration Fees

• Term Loans: 2% of the total loan amount
• Lines of Credit: 2% of the authorized amount

Note: Registration fees can be financed as part of the loan.

Security and Guarantees

Lenders have options for securing the loan:

• Unsecured Personal Guarantee: For general financing.
• Secured Assets: For real property, equipment, leasehold improvements, intangible assets, and working capital costs.

How to Find a Lender

Many financial institutions in Canada participate in the CSBFP. If your current bank does not offer the program, you can explore other banks, credit unions, or caisses populaires. Visit Canada.ca/csbfp to find a lender near you.

Additional Information and Support

For more details, visit the CSBFP page on the Government of Canada’s website and download the program pamphlet. The Small Business Financing Directorate at ISED can provide further information, although they do not process loan applications.

Contact Information

Contact your financial institution or explore other government funding options through Canada’s Business Benefits Finder for more personalised assistance.

Conclusion

The Canada Small Business Financing Program (CSBFP) is an invaluable resource for small and medium-sized business owners in Canada. By offering accessible financing options, the program helps you manage costs, invest in growth, and maintain a competitive edge. If you’re looking to secure funding for your business, consider discussing the CSBFP with your financial institution today.