Canada Small Business Financing Loan (CSBFL)

Who is eligible?

• Canadian small businesses with a place of business and assets in Canada, engaged in commercial activities
• Businesses with estimated gross annual revenues not exceeding $10 million
• Retail businesses
• Wholesale businesses
• Service businesses (including those incidental to agriculture, such as services to farmers)
• Incorporated small businesses, including those owned by foreign citizens, provided they operate in Canada
• New businesses with projected first-year revenues not exceeding $10 million
• Not-for-profit, charitable, and religious organizations that carry on a business (since June 30, 2021)

Who is not eligible

• Businesses engaged in farming, as defined in Major Group 01 Agricultural Industries of the Standard Industrial Classification (SIC), 1980 of Statistics Canada.
• Organizations not operating a business (e.g., a private club whose only purpose is to collect donations).
• Holding corporations that do not operate a business as defined under the Act.
• Trusts, whether personal, private, or social, as they are not legal entities.
• Individuals or corporations purchasing real property solely for rental purposes (e.g., apartment buildings, commercial buildings).

Eligible expenses

• Purchase and improvement (including construction, renovation, and modernization) of real property used for the business.
• Decontamination costs of real property, provided they are required under federal or provincial law and are disclosed before the first disbursement, when securing the loan with a first mortgage.
• Leasehold improvements made for the borrower as tenant, for a tenant by an owner or franchisor, or the purchase of existing leasehold improvements from a tenant.
• Purchase, capitalized installation costs, or improvement of equipment used in business operations, including construction, renovation, modernization, and installation.
• Purchase or development of computer software (off-the-shelf, custom-made, mobile applications) and website development costs, where ownership or license of software or website is acquired from a specialized contractor/vendor.
• Development of infrastructure, programming, new functions, enhancements to the capacity or performance of a website, and initial graphic design.
• Intangible assets (non-monetary assets without physical substance that can be sold, transferred, licensed, rented, or exchanged, or arise from contractual or legal rights), including franchise fees, goodwill as part of a going concern purchase, incorporation costs, permits and licenses used in the operation of eligible assets, and capitalized research/development costs.
• Working capital costs required for day-to-day operating expenses, such as inventory, expenses related to the creation and development of software and websites not included under equipment/software, printed materials (brochures, flyers, business cards, menus, photocopies), professional fees (legal, accounting, appraisal), research and development costs, payroll, and rent.
• Financing of the 2% registration fee associated with the term loan.
• Freight and installation costs related to assets being financed.
• Non-refundable taxes and customs duties applicable to the assets being financed.

Eligible geographic areas

• Businesses located in Canada, with a place of business and assets held in Canada for the purpose of operating the business.

• The Canada Small Business Financing Program is overseen by the Small Business Financing Directorate, within Innovation, Science and Economic Development Canada, which provides guidance on the program's administration and interpretation.
• All correspondence or inquiries about the Canada Small Business Financing Loans should be directed to the Small Business Financing Program at Innovation, Science and Economic Development Canada, located at 235 Queen Street, Ottawa, Ontario, K1A 0H5.
• A toll-free information line is available for assistance at 1-866-959-1699, and inquiries can also be made via email at csbfp-pfpec@ised-isde.gc.ca.
• These loans are subject to specific realization and claim submission guidelines in the case of default or non-compliance, which require following detailed procedures to maximize recovery of the loan balance.
• Lenders are required to perform due diligence during the loan approval process, including credit checks and an assessment of the borrower's repayment ability, even if these procedures are not commonly undertaken for conventional loans of the same amount.
• The guidelines make provisions for various loan classes, security requirements, fee structures, and legal measures in case of realization and collection activities.
• The program has specific correction measures in case of non-compliance, allowing payment of claims if remedial actions are taken within the program's stipulated framework.
• The program permits regular reporting, including quarterly administration fee reports and annual reports on outstanding loan amounts, essential for compliance and accountability.
• An audit or examination may be conducted by the program's authorities, and lenders are required to assist and provide necessary documentation during such an audit.