Canada Small Business Financing Loan (CSBFL)
Canada
Canadian program improves small business financing access
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
- grant_single|allIndustries
grant_single|grantors
- Innovation, Science and Economic Development Canada (ISED)
- Innovation Canada
- 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|terms_and_conditions
This loan program provides structured financing options designed to assist small businesses in Canada with their operational and expansion costs, including specific terms for loans and lines of credit. The modalities ensure clear delineation between eligible uses and maximum financial limits.
- Term loans can finance up to a maximum of $1,000,000, with a $500,000 cap for expenses excluding real estate, and of this $500,000, $150,000 can cover intangible assets and working capital costs.
- Lines of credit are capped at $150,000, serving as an additional funding option beyond the term loan limits.
- Financing covers assets such as real property, leasehold improvements, equipment, intangible assets, and working capital costs, each with specific terms and conditions.
- Security requirements for loans include first ranking charges, with provisions for alternate security when necessary.
- Repayment terms span a maximum of 15 years for term loans and 5 years for lines of credit, with renewal options available for lines of credit.
- Interest rates for term loans are set at the lender's prime rate plus 3% or the posted residential mortgage rate plus 3%, while lines of credit have a floating rate of the lender's prime plus 5%.
- Registration fees of 2% apply to both term loans and lines of credit and can be financed as part of the loan.
- There are stipulations for the administration fee of 1.25% of the outstanding loan balance, calculated differently for term loans and lines of credit.
- Additional modalities include provisions for the substitution and release of security, handling of guarantees, and conditions for amendments or renewals of the loan terms.
grant_single_labels|projects
This grant supports activities that facilitate the financing of Canadian small businesses to ensure their establishment, expansion, and modernization. Eligible projects focus on funding assets that are integral to the operation and growth of small businesses.
- Financing for the purchase or improvement of real property including construction, renovation, or modernization.
- Funding the acquisition and installation of equipment essential for business operations.
- Investing in leasehold improvements made for the tenant by the owner or franchisor.
- Supporting the purchase of intangible assets such as franchise fees and incorporation costs.
- Providing for working capital needs to cover day-to-day operating expenses.
- Covering 2% of the registration fees.
grant_single|admissibleProjectsExample
$ 120,000
Digital transformation for a financial cooperative to enhance services
$ 80,000
Development of an e-commerce platform for a local crafts cooperative
$ 60,000
Purchase and installation of energy-efficient HVAC system for a boutique hotel
$ 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
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_single_labels|criteria
The evaluation and selection of projects for the Canada Small Business Financing Act grant are not explicitly defined in terms of point scores in the given document, but the criteria revolve around the adherence to specific program guidelines and regulations.
- Compliance with the legal requirements of the Canada Small Business Financing Act and Regulations.
- Thorough due diligence performed by the lender, including credit checks and assessments of repayment ability.
- Eligibility and suitability of the business and borrower as per the program's definitions and guidelines.
- Proper registration and administration of the loan including fees and compliance with time limitations.
- Appropriate security and documentation ensuring enforceable and valid security interests.
- Alignment with the specific financing purposes and expenditure classes authorized by the program, such as real property, leasehold improvements, or equipment.
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.
