Canada Small Business Financing Program (CSBFP) 

Definition

The Canada Small Business Financing Program (CSBFP) is a federal government initiative designed to help small businesses access financing for the acquisition of assets and equipment, as well as for leasehold improvements and commercial real estate.

What is the Canada Small Business Financing Program?

The CSBFP aims to support the growth and development of small businesses by providing them with access to affordable financing options. By guaranteeing a portion of the loan amount, the program encourages lenders to provide financing to eligible small businesses, thereby promoting entrepreneurship, innovation, and economic growth.

To qualify for financing under the CSBFP, businesses must meet certain eligibility criteria, including being a for-profit Canadian business with annual gross revenues of $10 million or less. Eligible businesses must use the loan proceeds for the purchase or improvement of eligible assets, such as equipment, machinery, vehicles, or real estate, used for commercial purposes.

The CSBFP provides loan guarantees to lenders, covering up to 90% of the net losses incurred in the event of default by the borrower. This reduces the risk for lenders and enables them to offer loans to small businesses at competitive interest rates and with flexible repayment terms. The maximum loan amount that can be guaranteed under the CSBFP is $1 million, with a maximum term of 10 years for equipment and leasehold improvements and 15 years for real estate. 

Example of the Canada Small Business Financing Program

Jane wants to expand her operations by purchasing new equipment. However, she lacks the necessary funds to finance the equipment purchase. Jane applies for a loan through a participating lender under the Canada Small Business Financing Program. The lender approves Jane’s loan application and provides her with the necessary funds to purchase the equipment. With the support of the CSBFP, Jane is able to buy the equipment she needs to grow her business without having to provide additional collateral, making it easier for her to access financing and expand her operations.