The Canada Small Business Financing Program (CSBFP) can help you qualify for up to $1.15 million in business financing. These loans and lines of credit are backed by the Canadian government, so you can get access to funding you might not be able to qualify for on your own. They also come with some of the most competitive interest rates on the market. Find out more about CSBFP financing, and learn how to apply today.
The Canada Small Business Financing Program offers term loans up to $1 million to help you start or expand your business, plus lines of credit up to $150,000. These financing products are backed by a guarantee from the Canadian government, and are typically offered exclusively by banks and credit unions.
With a Canadian Small Business Financing Program loan, you can qualify for either a term loan or a line of credit:
| Features | Details |
|---|---|
| Max. loan amount | $1 million |
| Government-backed? | Yes, it’s backed by the Canadian government, up to a maximum of 85%. |
| Who approves my application? | Financial institutions deliver the program and are solely responsible for approving the loan. The lender disburses funds, and then registers the loan with Innovation, Science and Economic Development Canada (ISED) |
| Interest rates | Your lender sets the interest rates. Maximums outlined below. Fixed: The maximum rate is the lender’s prime rate or single family residential mortgage rate for the term of the loan plus 3%. Floating: The maximum chargeable is the lender’s prime lending rate plus 3%. |
| Fees | 2% registration fee |
| Allowable uses | Purchase or improve business assets, max $500,000 for equipment, max $150,000 for working capital |
| Eligible small businesses | Corporations, sole proprietors, partnerships, cooperatives, start-ups or not-for-profits operating anywhere in Canada with a gross annual revenue of $10 million or less |
| Ineligible small businesses | Farming businesses |
A Canadian Small Business Financing Program loan lets you borrow up to $1 million for your business, with fewer restrictions than a conventional loan. You can apply as an established company or a startup (as long as you make less than $10 million in annual revenue and have fewer than 500 employees).
The funds you borrow will be backed by the Canadian government (up to 85%), meaning that they’ll repay a large portion of your loan if you default. This makes it much safer for lenders to provide you with a loan, since they are guaranteed the majority of repayment, even if you default.
All you need to do is find a lender willing to fund your application, and meet the eligibility criteria. Your lender will agree to your application and loan terms. Once the loan agreement is signed and finalized, your lender is responsible for registering the loan with the Canadian government (through the department of Innovation, Science and Economic Development Canada).
You may be required to sign a personal or corporate guarantee to secure your funds. This will make you responsible for repaying the loan with your assets if you default. Your lender will only be able to collect repayments from the government once they have exhausted efforts to retrieve funds/assets you put up to secure your loan.
For CSBF term loans, any money you spend must be supported by proof of purchase such as invoices, purchase agreements and receipts. Your proof of payment documents must be in your company’s name and provide details of the items purchased (e.g., make, model, serial numbers etc.) or the work done in order to be eligible for reimbursement.
The Canadian Small Business Financing Program covers small businesses and startups in most sectors. There are only a handful of exclusions to be aware of.
You can use Canada Small Business Financing Program term loans to cover the following expenses:
| Expenses | Max loan amount | Examples of what might be covered |
|---|---|---|
| Buy or improve commercial land or buildings | Up to $1 million of total loan amount |
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| Buy or improve new or used equipment or vehicles | Up to $500,000 of total loan amount |
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| Update or improve new or existing leaseholds | Up to $500,000 of total loan amount |
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| Intangible assets and working capital costs | Up to $150,000 of total loan amount |
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The following expenses would be ineligible for a CSBF program term loan:
Your lender will set the interest rates for your loan, but they will have to follow certain rules for how much you have to pay:
Beyond the rates you pay, you’ll also be charged a 2% registration fee on the full amount of your loan. For example, if you borrow $1 million dollars, you’ll pay a $20,000 fee. Registration fees have to be paid by the borrower to the lender, and they can be financed as part of your loan.
You can schedule repayments based on your needs (monthly, blended, seasonal or escalating), though you’ll need to schedule at least one payment of principal and interest each year.
You’ll repay your loan over a maximum term of 15 years, although you may go up to 25 years for commercial real estate. The only caveat if your loan is greater than 15 years is that it will need to be converted to a conventional loan (usually with higher rates) after you reach the 15 year mark.
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Below are the steps to apply for a Canadian Small Business Financing Program term loan:
| Features | Details |
|---|---|
| Max. line of credit amount | $150,000 |
| Government-backed? | Yes, it’s backed by the Innovation, Science and Economic Development Canada (ISED) |
| Who approves my application? | Financial institutions deliver the program and are solely responsible for approving the line of credit. The lender disburses funds, and then registers the LoC with ISED. |
| Interest rates | For lines of credit, the maximum chargeable is the lender’s prime lending rate plus 5%. |
| Fees | 2% registration fee based on credit limit |
| Allowable uses | Working capital only |
| Eligible small businesses | Corporations, sole proprietors, partnerships, cooperatives, not-for-profits or start-ups operating anywhere in Canada with a gross annual revenue of $10 million or less |
| Ineligible small businesses | Farming businesses |
A CSBFP line of credit lets you borrow up to $150,000 for your business, to cover your day-to-day operating expenses. You can apply as an established company or a startup (as long as you make less than $10 million in annual revenue and have fewer than 500 employees).
The funds you borrow will be backed by the Canadian government (up to 15%), meaning that they’ll repay a portion of your line of credit if you default. This makes it safer for lenders to provide you with access to funds, since they are guaranteed a portion of repayment.
For a Canada Small Business Financing Program line of credit, you’ll need to fill out an application and if accepted, sign an attestation indicating that the line of credit will only be used to pay for working capital costs. You’ll also need to specify that working capital costs paid through the line of credit were not incurred more than 365 days prior to the date the line of credit was authorized. Your line of credit will be registered with the Canadian government by your lender.
You may be required to sign a personal or corporate guarantee to secure your funds. This will make you responsible for repaying the loan with your assets if you default. Your lender will only be able to collect repayments from the government once they have exhausted any funds/assets you put up to secure your line of credit.
The CSBF program covers small businesses and startups in most sectors. There are only a handful of exclusions to be aware of.
| Expenses | Max Loan Amount | Examples of what might be covered |
|---|---|---|
| Intangible assets and working capital costs | Up to $150,000 of total loan amount | Working capital needs such as salaries, rent and inventory |
You can’t use a Canada Small Business Financing Program line of credit for anything other than working capital expenses. This means you can’t use the funds to purchase, lease or upgrade equipment. You also won’t be able to use funds for any of the exemptions listed under term loans. This includes debt consolidation, investing or financing direct farming expenses.
Your lender will set the interest rates for your loan, but they will have to follow certain rules for how much you have to pay:
You’ll repay your line of credit based on how much you take out. The terms of your repayment will be negotiated with your lender. The maximum term for a CSBFP line of credit is 5 years.
Below are the steps to apply for a Canada Small Business Financing Program line of credit:
You can get a CSBFP term loan or line of credit from banks and credit unions. It is not possible to get these types of loans from alterative, online lenders. Here is a full list of financial institutions that have partnered with the Canada Small Business Financing Program:
| Large bank | Alternative banks | Credit unions |
|---|---|---|
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CSBFP loans and lines of credit can help you access government-backed funding for your business. Both types of financing products come with features such as lower than average interest rates, longer terms and more flexible repayment options than traditional loans. You can source CSBFP loans and lines of credit from banks and credit unions. To learn more about business loans and to compare your options, check out our full guide here.
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