The federal government has a loan program under the Canada Small Business Financing Program, (CSBFP) designed to increase the availability of financing for the establishment, expansion, improvement and modernization of new and existing small businesses.
The CSBFP is a federal government program that applies to Canadian businesses with annual gross revenues of up to $5 million. It provides 90% financing for eligible costs.
Eligible items that can be financed under the program include:
- Purchasing or improving land, real property or immovables
- Purchasing leasehold improvements or improving leased property
- Purchasing or improving new or used equipment
Loans cannot be used to finance uneligible items such as:
- Working capital
- Franchise fees
- Research and development
There may be options available outside of this program to finance part of the items that are not eligible under this program, but they are on a case by case basis.
Applications for CSBFA loans are subject to the same fundamental lending principles as those applied to any other bank loan product. You must apply and be approved at a bank. You cannot go directly to the Federal Government for this financing. This program provides a partial government guarantee of the banks eligible losses on these loans, if default occurs.
The main features of CSBFA loans are:
- Maximum aggregate loan limit is $500,000 which includes:
- Maximum term available is 10 years.
- Fixed or floating rate loans are available.
- Commercial Loan Insurance Plan is available.
* the maximum loan limit of $350,000 for equipment and/or leasehold improvement (The total financing for equipment and leaseholds, including the 2% fee, must not exceed the $350,000 limit.)
* outstanding CSBFA loans (under borrower and related borrower)
* 2% registration fee (payable by the client to the government may be added to the loan) the maximum loan limit for real property or immovables (the total financing for real property or immovables including as applicable the aggregate of the three items in the bullets above must not exceed $500,000)
Borrower is to meet CSBFP eligibility requirements.
CSBFA and Regulations permit these maximum interest rates:
- Fixed Rate: Posted single family residential mortgage rate on the date of initial advance or renewal, plus 3%.
- Floating Rate: Prime rate, plus 3%
- (there is currently an interest rate sale on, up to July 31, 2015, for all new variable rate Canadian Small Business Financing Program (CSBFP). Loans will receive a .50% basis points discount off the standard Prime + 3.00% interest rate)
- All rates are subject to change
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