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.