Canada Small Business Financing Loan (CSBFL)

Who is eligible?

• Any new or existing small business operating in Canada.
• Sole proprietorships, partnerships, corporations and qualifying cooperatives.
• Not-for-profit, charitable and religious organizations that carry on businesses.

Who is not eligible

• Businesses engaged in farming.
• Businesses that do not operate a business.
• Holding corporations that do not operate a business.
• Trusts.
• Individuals or corporations purchasing real property solely for rental purposes.

Eligible expenses

• Term loans for equipment and leasehold improvements, intangible assets, and working capital costs.
• Line of credit for working capital costs.
• Financing of the 2% registration fee.

Ineligible Costs and Activities

• Borrower's labour
• Pre-existing term loan
• Pre-existing line of credit
• Shares
• Vendor-take-back financing
• Exchange or barter
• Farming
• Commercial or residential rental properties

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 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.

• Step 1: Eligibility Verification of Borrowers
• Confirm that the borrower is eligible by referring to paragraph 2.1.
• Ensure that the business is eligible and does not exceed the established revenue limits.
• Step 2: Preparing the Loan Application
• Gather proof of purchase and payment for the assets to be financed.
• Obtain the necessary appraisals, especially for transactions between related parties.
• Prepare the loan agreement with details on the amount, interest rate, and terms.
• Step 3: Loan Registration
• Complete the loan registration form with all necessary details.
• Stamp the application at the post office within six months of the first disbursement of funds.
• Include a check for the 2% registration fees with the form.
• Step 4: Administration and Monitoring
• Administer the loan according to the agreed terms.
• Produce annual statements.
• Execute primary and secondary securities if necessary.
• Step 5: Claim Submission
• In case of default, follow the timely claim procedures.
• Submit a regular or interim claim depending on the situation.
• Include all relevant supporting documents.

• 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.