Canada Small Business Financing Program: Loans for Business Growth

Small business owners frequently face challenges when scaling their operations. With limited cash flow, most seek financial support for growth projects through banks. However, business owners are often rejected for loans and other financial products because they’re deemed a high-risk borrower. As a result, their business stays small and unable to compete with larger, more established companies.

Fortunately, entrepreneurs and other business leaders can access small business loans through government-backed programs like the Canada Small Business Financing Program (CSBFP).  The program provides a guarantee to banks and financial institutions so that your financing application carries lower risk. Although there are fees associated with the program, for some business owners it’s exactly what they need to grow and succeed.

Companies can negotiate loans of up to $1 million through the Canada Small Business Financing Program.

To access CSBFP loans, companies must approach a financial institution that supports the program. Most Canadian banks, credit unions, and caisse populaires are equipped to help clients with applications, although online tools can help you find participating institutions. There is no deadline to participate as this is an ongoing program supported through the federal government.

What is the Canada Small Business Financing Program?

The Canada Small Business Financing Program (CSBPF) is designed to increase availability of funding for new and existing businesses. It makes the process of obtaining a small business loan easier because lenders share the loan’s risk with Innovation, Science, and Economic Development Canada (ISED).

Up to $1 million in small business loans can be negotiated through the Canada Small Business Financing Program. Up to $350,000 can be used for leasehold improvements.

CSBFP loans are often used to establish, modernize, and improve small businesses. If your business earns a gross annual revenue of $10 million or less and has been unable to access financing through more traditional financial products, the Canada Small Business Financing Program could be right for you.

What Rates are Applied to CSBFP?

The Canada Small Business Financing Program provides competitive rates for startups and small businesses. These include:

• Registration Fees: 2% of the loan’s total value will be charged as a registration fee. This can be financed through the loan and paid incrementally.
• Interest Rates: Interest rates will be assessed either on a fixed or variable basis. Participants can negotiate these terms with their financial institution, however most small businesses should expect rates around prime +3%.

Who is Eligible for the Canada Small Business Financing Program?

Small, growth-oriented businesses are encouraged to apply for the Canada Small Business Financing Program if they:

• Are a for-profit company;
• Operate and hold assets within Canada;
• Provide products or services to Canadian customers; and
• Do not currently exceed $10 million in annual revenue.

What Activities does the Canada Small Business Financing Program Support?

Canada Small Business Financing Program loans are used to finance many common small business expansion costs, including:

• Purchasing or improving equipment;
• Purchasing leasehold improvements; and
• Purchasing or improving land or buildings for commercial purposes.

How to Apply for CSBFP Small Business Funding

Since the program is delivered through financial institutions, entrepreneurs and small business executives need to contact a representative from their preferred bank, credit union, or caisse populaire. Like applying for other financial instruments, companies must provide a detailed business plan and financial documents for the previous two to three years. All funding decisions are made by the financial institution.

To find a participating financial institution near you, please use the Government of Canada’s interactive financing map.

More Types of Funding for Small Businesses

Small business owners and executives seeking capital to support growth projects should also consider exploring government funding programs, including grants and loans. These types of funding are often directed towards established, cashflow-positive companies, and can offset a considerable portion of eligible project expenses.

Ready to explore other types of government funding programs? Download the Types of Government Funding slide deck to uncover the top options for Canadian businesses.