Canada Small Business Financing Loan (CSBFL)
Canada
The Canada Small Business Financing Loan (CSBFL) is designed to help small businesses purchase, install, renovate and modernize business equipment and other fixed assets. The Government of Canada makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|maxCount
grant_single|deadlines
- grant_single|openingDateJune 30, 2021
grant_single|financingType
Loans and Capital investments
grant_single|eligibleIndustries
- Wholesale trade
- Retail trade
- Health care and social assistance
- Accommodation and food services
grant_single|grantors
- Innovation Canada
- Innovation, Science and Economic Development Canada (ISED)
- Government of Canada
grant_single|status
grant_card_status|open
grant_single_labels|preview
The Canada Small Business Financing Loan (CSBFL) stands as a pivotal resource for small businesses across Canada, aiming to bolster their growth and operational efficiency. This program is specifically tailored to assist these enterprises in making significant investments towards the enhancement of their business infrastructure. Through the CSBFL, small businesses are afforded the opportunity to purchase new or used equipment, install essential systems, undertake renovations, and modernize their facilities, thereby ensuring they remain competitive and capable of meeting the demands of their respective markets.
grant_single_labels|projects
This grant is available to companies across Canada. Eligible locations must have a place of business in Canada with assets held there for the purpose of operating the business.
- All provinces and territories within Canada.
- Any location within Canada where the business has a place of business.
- Any place in Canada with necessary assets for the operation of the business.
grant_single|admissibleProjectsExample
$120,000
Digital transformation for a financial cooperative to enhance services
$75,000
Upgrade of IT infrastructure for a nonprofit community center
$90,000
Renovation of a historic bakery to improve production capabilities
$150,000
Decontamination of an industrial site for a recycling facility
$60,000
Purchase and installation of energy-efficient HVAC system for a boutique hotel
$80,000
Development of an e-commerce platform for a local crafts cooperative
grant_single_labels|admissibility
Eligibility for the Canada Small Business Financing Act (CSBF) program is determined by specific requirements related to the applicant's business structure, revenue, and financing needs.
- The borrower must be a person carrying on or about to carry on a small business in Canada, which can be a sole proprietorship, partnership, or corporation.
- The business must have its place of operation in Canada with its assets held in Canada and must not be primarily engaged in farming as defined by the Standard Industrial Classification (SIC), 1980 of Statistics Canada.
- The business must offer services or products to the public, excluding private clubs or entities solely collecting donations.
- For an existing business, the estimated gross annual revenues in the fiscal year the CSBF loan is approved must not exceed $10 million. For a new business, the estimated gross annual revenues during the first 52 weeks of operation must not exceed $10 million.
- Non-profit, charitable, and religious organizations that carry on a business are eligible since June 30, 2021.
- The business cannot be a holding corporation or a trust since these do not qualify as legal entities operating a business.
- Businesses maintaining agency relationships (e.g., real estate brokerages) must calculate gross revenue as the income less any commissions or obligations payable due to the principal-agent relationship.
- Related borrowers must pass the independent small business test or otherwise be subjected to reduced maximum loan amounts based on aggregate outstanding CSBF loans to related borrowers.
- The maximum loan amount for a CSBF term loan must not exceed $1 million, with specific caps on allocations for non-real estate purchases and for intangible assets and working capital costs.
- Borrowers must provide sufficient proof of purchase and proof of payment for eligible expenditures within up to 365 days before the date of loan approval.
grant_eligibility_criteria|who_can_apply
Canadian small business owners, entrepreneurs, or corporations that are looking to establish, expand, or modernize their small businesses may apply for loans under the Canada Small Business Financing Act. Eligible applicants include individuals operating as sole proprietorships or partnerships, as well as corporates meeting the defined criteria for 'eligible small business.' The business must operate in Canada and have estimated gross annual revenues not exceeding $10 million per annum. Not-for-profit, charitable, and religious organizations that carry on a business are also eligible. However, businesses involved in farming, as per Statistics Canada's Standard Industrial Classification, 1980, Major Group 01 Agricultural Industries, holding corporations, trusts, or companies solely managing properties for rental purposes are not eligible.
grant_eligibility_criteria|who_cannot_apply
The Canada Small Business Financing Act (CSBFA) has specific exclusions for certain businesses and industries to ensure that the financing is used appropriately and within the intended sectors. These restrictions are clearly outlined in the Act and Regulations.
- Businesses engaged in farming as defined by the Standard Industrial Classification (SIC), Major Group 01 Agricultural Industries.
- Individuals or corporations purchasing real property solely for rental purposes (e.g., apartment buildings, commercial buildings).
- Any organization not operating a business, such as private clubs or entities solely collecting donations.
- Holding corporations that do not operate a business themselves.
- Trusts, whether personal, private, or social, as they are not legal entities.
grant_eligibility_criteria|eligible_expenses
The Canada Small Business Financing Program offers financial support for Canadian small businesses to help them establish, expand, and modernize. The eligible projects encompass acquiring real property, purchasing equipment, and financing intangible assets and working capital costs.
- Financing the purchase or improvement of real property used for business operations.
- Purchasing equipment necessary for business operations, including capitalized installation costs and improvements.
- Investing in computer software and website development necessary for the business.
- Covering intangible assets such as franchise fees, goodwill part of going concern purchases, and capitalized research/development costs.
- Funding working capital costs for day-to-day operating expenses like inventory, rent, and payroll.
grant_eligibility_criteria|zone
The Canada Small Business Financing Program allows financing for specific expenses related to the establishment, expansion, and modernization of small businesses.
- The purchase and improvement of real property, with a focus on construction, renovation, and modernization.
- Leasehold improvements, including construction, modernization, and improvements necessary for the business.
- Capital equipment purchases, including major repairs and installation costs.
- The purchase of intangible assets, such as franchise fees, goodwill (if part of a going concern purchase), and permits.
- Working capital costs necessary to cover day-to-day operating expenses, including inventory, professional fees, payroll, and rent.
- Registration fees, with the option to include these as part of the financed amount.
grant_single_labels|register
Here are the steps to apply for the Canada Small Business Financing Program:
- Step 1: Initial Assessment
- Evaluate whether your small business qualifies, noting your gross annual revenue should not exceed $10 million.
- Determine if your business is within the eligible scope and does not fall into ineligible business categories.
- Step 2: Prepare Documentation
- Accumulate necessary financial records and business plans that demonstrate your ability to repay the loan.
- Gather proof of your business being carried out in Canada and the eligibility criteria being met.
- If applicable, prepare an appraisal of the business asset to be purchased or improved.
- Step 3: Apply for the Loan
- Contact an eligible financial institution like a bank or credit union that participates in the CSBF program.
- Submit your application with the required documentation stipulated by the financial institution.
- Step 4: Loan Registration
- Ensure the chosen lender registers your loan within six months after the first loan disbursement.
- The lender will submit a registration form, signed by both parties, and the appropriate fees to the Small Business Financing Directorate.
- Step 5: Confirmation and Use of Funds
- Await confirmation from the Small Business Financing Directorate that your loan has been registered successfully.
- Once confirmed, ensure that the loan is used in accordance with eligible expenses and purposes as outlined in the program.
grant_single_labels|otherInfo
The CSBF Program offers various types of loans to small businesses for specific purposes, each with its own rules and eligible expenditures. There are restrictions on what can be financed, including pre-existing loans and shares acquisition.
- Financing is capped at $1,000,000 per borrower, with a maximum of $500,000 for purposes other than real property purchase and improvement.
- A maximum of $150,000 can be used for intangible assets and working capital costs within the $500,000 limit.
- Automatic inclusion of financed registration fees in the maximum loan amounts.
- The 50% area usage rule applies to real property to determine eligibility for finance.
- The 3-year rule restricts resale or lease intentions of the operational area for real property financing.
- Leasehold improvements include fences, landscaping, and walls necessary for business operation but are not considered real property improvements.
- Eligible equipment includes motor vehicles, computers, and major repairs, provided they are capitalized.
- Computer software and website development costs must be defined in a contract and result in ownership or a license for use.
- Costs attributed to the borrower’s labor, pre-existing term loans, and acquisition of shares are ineligible for CSBF loans.
- Vendor take-back financing and exchange or barter agreements are not eligible for CSBF loans.
Apply to this program
Support for Small Business Growth in Canada
The Canada Small Business Financing Act (CSBFA) provides essential financial support to small businesses across Canada, facilitating their establishment, expansion, and modernization. By offering loans through the Canada Small Business Financing (CSBF) program, the act enhances access to capital for various business needs.
Understanding the Canada Small Business Financing Program
The Canada Small Business Financing Program is a critical initiative designed to bolster small businesses by increasing their access to financing. The program is structured under the Canada Small Business Financing Act (CSBFA), aiming to alleviate the challenges small businesses face in securing loans. By collaborating with financial institutions, the government shares the risk, offering lenders the assurance needed to extend credit to small business owners.
The primary aim of the CSBF program is to foster the operational capacity of small businesses throughout Canada. This is accomplished by offering loans that can be used for the purchase of certain tangible assets essential for business operations, or to make improvements to real property or leasehold improvements.
In helping small businesses, the CSBFA sets specific eligibility criteria to ensure that the funds are directed towards businesses with the potential for growth and a substantial contribution to the Canadian economy. Businesses must be operating in Canada and should meet the revenue caps set by the program to qualify. Moreover, the program is inclusive, covering a broad range of industries, although there are exceptions, such as farming, which are addressed by different funding programs.
One of the most significant aspects of the CSBF program is its focus on comprehensive due diligence. Participating lenders are required to conduct thorough assessments of applicants' creditworthiness, similar to conventional loan applications. This ensures that loans are given to businesses with a realistic plan for repayment, thereby fostering a cycle of sustained business growth and financial responsibility.
The program delineates specific uses for the funds, which include purchasing or improving land and buildings essential for business operations, acquiring new or upgraded equipment, and making leasehold improvements. This targeted allocation helps in creating a direct impact on the operational capabilities of small businesses, allowing them to modernize and become more competitive.
In addition to its core financial support, the CSBF program also facilitates broader economic development by empowering small businesses to innovate and adapt to market conditions, thus playing a crucial role in their long-term prosperity. By focusing on modernization and expansion, the program helps to stimulate job creation and economic growth across different sectors.
Ultimately, the Canada Small Business Financing Program stands as a testament to the country's commitment to nurturing small enterprises. By providing necessary resources to help businesses succeed, the program not only strengthens the individual business entities but also contributes significantly to national economic resilience and diversity.
