Is the Canada Small Business Financing Program Right for You?

You don't have to add to the uncertainty surrounding starting a new Canadian franchise business by not having a clear financing path lined up. While you can do things like borrow against your home or retirement accounts to make your business ownership dreams come true, you can make it easier on yourself and lower your risk by getting financing instead. While some franchisors do offer financing and/or partner with specific lenders, there is one option you may have overlooked: the Canada Small Business Financing Program (CSBFP).

CSBFP Eligibility and You

The CSBFP was created to help Canadians realize their business ownership dreams, and many franchises are eligible. According to Innovation, Science and Economic Development Canada, you can apply for a loan under this program for most existing and start-up for-profit businesses that have gross revenues of under $10 million.

While you can't use a CSBFP to pay franchise fees, you are allowed to use the money toward the purchase of a commercial building or land, equipment and renovations that you need to make to your property for your business.

Loan Amounts and Fees

The largest loan you can take out under the program is $1 million, but no more than $350,000 of that amount can be used to renovate a property or buy equipment. You will pay a registration fee of 2 percent, but you can finance that as part of your loan. Your interest rate may be fixed or variable depending on your lender, and lenders can still charge you the fees they would charge a non-CSBFP borrower for the same loan amount.

Where to apply

Many credit unions, banks and other financial institutions in Canada participate in the program. You can find a list of lenders at the official website of Industry Canada ( 

A lender participating in the program is no guarantee you'll be accepted, as the financial institution lends you the money rather than the government. You still need to present your business proposal to the lender and meet their criteria to get approved. If you don't get approved by the first lender you select, you can tweak your proposal and try another lender because the business loan criteria will vary by institution.

When you're exploring your franchise financing options, remember to check out all the avenues, including the CSBFP. Craft a solid business plan and know what you can handle financially before making your final funding decision.