Canada Small Business Financing Act – Annual Report 2008–2009
6. CSBF Program Changes
On April 1, 2009, a number of changes to the CSBF Program came into effect, including the implementation of a package of regulatory amendments, an increase to the maximum loan size and an increase to the liability ceiling for each lender using the program.
The regulatory amendments are part of ongoing improvements to the CSBF Program and respond to concerns raised in the last Comprehensive Review (1999–2004) of the program. The amendments were primarily focused on reducing administrative burden, streamlining processes to be more in line with conventional lending practices, and providing further clarity to some sections of the existing regulations.
The maximum amount for CSBF Program loans was increased from $250 000 to $500 000 of which a maximum of $350 000 can be used to finance the purchase of equipment and leasehold improvement. Since the maximum loan size has not changed since 1993, this increase will allow more small businesses to have access to the financing they need, for an amount that is more in line with current market prices. This will allow SMEs to start, modernize and expand their businesses, thus increasing benefits for the Canadian economy.
Finally, the liability ceiling for each lender using the program was increased from 10 percent to 12 percent of the value of its portfolio in excess of $500 000 (see Section 2 "Key Program Parameters" for the details on the calculation). By increasing the cap, the Government of Canada has accepted greater risk and exposure for loans that may default, thereby making the CSBF Program a more attractive option when lenders are evaluating financing alternatives for SMEs.
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