The Canada Small Business Financing Program was established in 1999 and its goal is to increase the availability of loans and capital leases to assist and improve Canadian small businesses. Funded by the majority of financial institutions and select leasing companies, the federal government guarantees 85% of the lender’s losses in the event of borrower default.
Most small businesses starting up in Canada are eligible as long as their gross revenues during the fiscal year of application do not exceed $5,000,000. Sole proprietorships, partnerships, and incorporated companies all qualify. Not eligible are farming, charitable, or religious organizations.
- the purchase or improvement of real property and immovables
- leasehold improvements or improvements to leased property
- the purchase or improvement of new or used equipment
Note: franchise fees, inventories, and all marketing-related supplies, good, and fees do not qualify for financing.
The maximum amount a small business can receive under the CSBF Program is $250,000.
The lending institutions will determine if security is required to be held and the amount of security based on the amount of the loan. They may also request corporate and/or personal guarantees to a maximum of 25% of the total financed amount.
Interest rates on loans may be either floating or fixed. The floating rate cannot be more than 3 percent higher than a lender's prime lending rate. Fixed rates cannot be more than 3 percent higher than the lender's residential mortgage rate for the term of the loan.
Visit the local branch of your preferred banking institution and request an appointment with the small business officer or person responsible for lending for small business. Be prepared to fill out an applicable form which will need to be submitted with your business plan, including financial forecasts, franchise agreement, and a summary of all qualifying franchise expenses issued by the franchisor.
