Information for Business Support Organisations and Intermediaries

The presentation below has been developed for associations and intermediaries 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

About the CSBF Program

  • The CSBF Program is a loan loss-sharing program between the government and the private sector lenders that facilitates access to affordable asset-based financing to small and medium-sized businesses.
  • The CSBF Program operates in all provinces and territories through a network of lenders including:
    • Chartered Banks
    • Credit Unions, Caisses populaires

Main Objectives

  • To increase availability of financing for the establishment, expansion, modernization and improvement of small businesses.
  • To facilitate access to loans that would not otherwise be available to small businesses or would only obtain under less favourable terms.
  • To stimulate economic growth and create jobs among small and medium-sized enterprises.

Eligibility and Other Criteria

  • Businesses operating for profit with gross annual revenues of $5 million or less
  • Borrower can be sole proprietor, partnership or corporation
  • Non-eligible businesses:
    • Farming
    • Religious/charitable organizations
    • Not-for-profit organizations
  • Financing limited to 90% of the cost of the eligible assets:
    • Real Property (land, building)
    • Leasehold Improvements
    • Equipment (trucks, computers, etc.)
  • Maximum amount of the loan:
    • The maximum amount of the loan: $500,000 (Of which no more than $350,000 can be used for leasehold improvements or equipment)
  • Maximum term of loan: 10 years
  • Loss Sharing: 85% Industry Canada, 15% lender

Interest, Fees and Security

  • Interest:
    • Maximum variable rate: Prime lending rate + 3%
    • Maximum fixed rate: Single family residential mortgage rate + 3%
    • Includes 1.25% annual administration fee (remitted to Industry Canada)
  • Fee:
    • 2% registration fee paid by the borrower (can be financed)
  • Securities:
    • A primary security on assets financed is mandatory
    • Personal guarantees or suretyships are optional and limited to 25% of the loan amount
    • Corporate guarantees are also optional

How the Program Operates

  • The CSBFP is delivered by financial institutions through their branches across Canada.
  • Small businesses seek CSBFP loans from banks, credit unions or caisses populaires by presenting their business plan to their commercial loan officer.
  • Lenders are responsible for all credit decisions. The funds disbursed are those of the lender, not Industry Canada.
  • Industry Canada does not get involved in the decision making process of granting loans under the program and the day to day oversight of the loans.
  • In the event of loan default, Industry Canada pays 85% of the net eligible losses to the lender.
  • The CSBFP collects fees to help offset the cost of claims.

Who Does What: Industry Canada / Lenders

Role of Industry Canada:

  • Design the program and legislation and provide information to lenders
  • Ensure awareness of the program
  • Approve and designate lenders
  • Register loans and collect registration and administration fees
  • Review and pay lender's claims for losses on defaulted loans
  • Review and report on program performance to Parliament

Role of Lenders:

  • Make credit decisions
  • Apply same due diligence as for conventional loans (e.g. credit check)
  • Register loans with Industry Canada, remit registration fees paid by small businesses and report and pay administration fees
  • Realize all securities and guarantees (in case of default) before submitting a claim for loss

Program Activity — 2010–2011

National

  • 7,466 loans, totalling almost $1.03 billion
  • $137,521 average loan size
  • New businesses (< 1 year) = 57.3%
  • Between 1 year and 3 years = 11.0%
  • Businesses over 3 years = 31.7%
  • Breakdown of financing for the program
    • 43.1% equipment
    • 27.5% real property and immovable
    • 29.4% leasehold improvements
  • Impact on employment:
    • 18,697 new jobs created

Program Activity — 2010–2011 (continued)
Breakdown of Lending and Claims by Industry Sectors

(Fiscal Year 2010/11)

Industry Sector % Lending % Claim
Accomodation and food services 27.4 34.0
Manufacturing 6.7 10.0
Other services 8.8 15.2
Retail trade 16.8 19.7
Transportation and warehousing 6.5 3.9
Other sectors* 33.8 17.1

*Other sectors are the following: Administration and support; Waste management and remediation services; Agriculture (support activities); Forestry, fishing and hunting; Arts, entertainment and recreation; Construction; Educational service; Finance and insurance; Health care and social assistance; Information and cultural industries; Mining, and oil and gas extraction; Personal care services; Professional, scientific and technical services; Real estate and rental and leasing; Repair and maintenance services; Utilities; Wholesale.

Program Activity — 2010–2011 (continued)
Geographic Distribution of Lending and Claims

Geographic Distribution of Lending and Claims – Fiscal Year 2010/11

What's in it for Small Businesses?

  • Program makes it easier for small businesses to obtain loans by sharing the risk with lenders. (e.g. Restaurants, franchises, start-ups)
  • Leasehold improvements may be financed under the program.
  • Loans can be used to finance up to 90% of the cost of real property, land, leasehold improvements and equipment.

Associations and intermediaries can play an important role...

  • By ensuring that small businesses are aware of this program through the associations' newsletters, web links and the distribution of pamphlets.

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
www.ic.gc.ca/csbfp
Order our pamphlet and request our icon to link to the CSBFP web site.