Information for Business Support Organizations

The presentation below has been developed for business support organizations who deal directly with small and medium-size businesses and who are interested in learning more about the program parameters. For more information, please contact us at 1-866-959-1699.

Overview

The CSBF Program

  • Makes it easier for small businesses to obtain loans from financial institutions as the risk is shared between Industry Canada and the lenders.
  • More than 142,000 businesses, since 1999, totalling about $1 billion each year.
  • Operates in all provinces and territories through a network of lenders including:
    • Chartered Banks
    • Credit Unions, Caisses populaires
  • Helps create jobs.

Eligibility and Other Criteria

  • Start-ups and existing businesses operating for profit with gross annual revenues of $5 million or less
  • Borrower can be sole proprietor, partnership, corporation or cooperative
  • Non-eligible businesses:
    • Farming
    • Religious/charitable organizations
    • Not-for-profit organizations
  • Assets which can be financed:
    • Real Property (land, building)
    • Leasehold Improvements
    • Equipment (trucks, computers,etc.)
  • Maximum amount of the loan:
    • $500,000 of which no more than $350,000 can be used for leasehold improvements and equipment.
  • Ineligible items include:
    • Working capital, inventory, advertising, goodwill, franchise fees, labour and research and development.

Interest, Fees and Security

  • Maximum Interest Rate:
    • Variable rate: Prime lending rate + 3%
    • Fixed rate: Single family residential mortgage rate + 3%
    • Includes 1.25% annual administration fee (remitted to Industry Canada)
  • Fees:
    • 2% registration fee paid by the borrower (can be financed)
    • Lenders fees may apply (cannot be financed)
  • Securities:
    • A primary security on assets financed is mandatory
    • Personal guarantees or suretyships are optional

How to Apply

  • Start-ups and small businesses can apply by presenting their business plan directly to their bank, credit union or caisse populaire.
  • Lenders are responsible for all credit decisions, day to day oversight of the loan administration and disbursement of funds. Industry Canada does not get involved.
  • Find a lender near you through the Find a loan for your small business hyperlink.

How the Program Operates

Role of Industry Canada:

  • Design the program and legislation
  • Ensure awareness of the program
  • Register loans and collect registration and administration fees
  • Review and pay lender's claims for losses on defaulted loans
  • Ensure compliance

Role of Lenders:

  • Make credit decisions and disburse funds (lender funds)
  • Apply same due diligence as for conventional loans (e.g. credit check and site inspections)
  • Register loans, remit registration fees and report and pay administration fees
  • Realize all securities and guarantees (in case of default) before submitting a claim for loss

In the event of loan default:

  • Industry Canada pays 85% of the net eligible losses to the lender.
  • The lender absorbs 15% of the loss.

What's in it for Small Businesses?

  • Helps obtain loans that:
    • would not otherwise be available to small businesses or;
    • would be obtained under less favourable terms.(e.g. Restaurants, franchises, start-ups)
  • Leasehold improvements may be financed.
  • Level of financing is negotiable with the lender

Business Support Organisations can play an important role…

  • By increasing awareness of this program through newsletters, web links and the distribution of pamphlets.

Key Points

  • The CSBFP is a loan program
  • Grants and other government programs: www.canadabusiness.gc.ca
  • Start up and existing businesses are eligible
  • The CSBFP can be used to purchase assets
  • Apply for a CSBFP loan through your financial institution
  • Map of financial institutions: www.ic.gc.ca

How to Reach Us

Canada Small Business Financing Program
235 Queen Street
Ottawa, Ontario K1A 0H5
Toll-free:1-866-959-1699
Fax:1-613-952-0290

Order our pamphlet and request our icon to link to the CSBFP web site.