Guidelines

Section A: Making a CSBF Loan

2 Maximum Loan Amount

For loans made before April 1, 2009, a borrower and related borrowers (see Item 3.2 of this Section) can borrow up to $250,000 calculated as at the date of the first disbursement of the loan funds. It includes the total of outstanding principal balances of all CSBFA and Small Business Loans Act (SBLA) loans. Act par.4(2)(b); Regs ss.1(3)

For loans made on or after April 1, 2009, a borrower and related borrowers can borrow up to $500,000¹ of which the maximum of $350,000 can be used to finance the purchase or improvement of equipment and the purchase of leasehold improvements. The maximum amount that a borrower can have at any time includes the total of outstanding principal balances of all CSBFA and SBLA loans. Note that if the registration fee is financed, the maximum loan amounts would include the amount of the registration fee. The following are various scenarios that illustrate these new maximum amounts:

• A borrower can finance up to $500,000 for purchase of real property.
• A borrower can finance $400,000 to purchase real property plus $100,000 to purchase equipment for a total of $500,000.
• A borrower has an existing CSBFA loan used to finance real property with an outstanding balance of $100,000. The borrower can finance $200,000 for improvements to the real property and $200,000 to purchase equipment.
• A borrower can finance the purchase of equipment and leaseholds up to a maximum of $350,000.

If two or more borrowers amalgamate and at the time of an amalgamation the aggregate balance outstanding of all CSBFA and/or SBLA loans previously made to any of the small businesses that amalgamate exceeds $500,000, the loans held by the new legal entity resulting from the amalgamation continue to be eligible and in compliance with the CSBF and SBL Acts and Regulations.
[Bulletin October – 2006]

If a borrower requires financing in excess of $500,000 to purchase assets that will be secured on an equal-ranking-basis with a CSBF loan and a conventional loan, the lender must make separate loan documents (e.g. loan agreement, promissory note, etc.) for the CSBF and conventional loans. In the case of a conditional sales contract, one loan document can cover the conditional sale financing.

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¹ Wherever the amount of $500,000 is used throughout Guidelines, it shall mean to include the restriction on the maximum loan amount of $350,000 as set out above. (Back to reference)