Information for Business Support Organisations

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.
  • 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
  • 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:
    • $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)
    • 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

    How to Apply

  • 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 www.ic.gc.ca/csbfp 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.

    Program Activity — 2011–2012

  • 7,196 loans, totalling $996 million
  • $138,453 average loan size
  • Age of business:
    • New businesses (< 1 year) = 57.5%
    • Between 1 year and 3 years = 11.5%
    • Businesses over 3 years = 31%
  • Popular Industry Sectors:
    • Accommodation and food services (29%)
    • Retail trade (15%)
  • Breakdown by assets financed
    • 44% equipment
    • 24.2% commercial buildings and land
    • 31.8% leasehold improvements

    • 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.
  • Finance up to 90% of the cost of buildings used for commercial purposes, land, leasehold improvements and equipment.

    • Business Support Organisations can play an important role...

  • By increasing awareness of this program through 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

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