The Canada Small Business Financing Program, explained

The Canada Small Business Financing Program (CSBFP) helps small businesses borrow from banks and credit unions when they might not qualify for a regular loan. The government guarantees a large share of the loan to the lender, which makes the lender more willing to say yes.

Who it's for

Businesses in Canada with gross annual revenue of $10 million or less, including startups. You apply through a participating bank or credit union, not the government.

What it covers and how much

• Total program maximum: $1.15 million per borrower, made up of up to $1 million in term loans and up to $150,000 in a line of credit.
• Equipment and leasehold improvements: up to $500,000.
• Intangible assets and working capital: up to $150,000, within the $500,000 above.
• Real property: buying or improving commercial property, within the $1 million term loan limit.

Costs and terms

• A 2% registration fee paid to the government, which can be added to the loan.
• Rates are set by the lender within program limits.
• Terms run up to 15 years for equipment and leasehold loans, longer for real property.

The trade-offs

It's still a bank loan. The lender does its own underwriting, it can take longer than alternative financing, and some lenders use the program more than others. If you need funds quickly, or your file has bumps the bank won't accept, other options may fit better.

Is it right for you?

It's often a strong fit for equipment, buildouts and acquisitions where you can wait a few weeks for a better rate. Program details change from time to time, so confirm current limits with the lender. Your advisor can tell you whether the CSBFP or a faster alternative makes more sense for your timeline.