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ARCHIVED—Comprehensive Review Report (2004–09)
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Appendix B: Key Canada Small Business Financing Program Parameters22
Borrower eligibility: To ensure the program is targeted at small businesses, only firms with annual sales of $5 million or less are eligible to use the program.23
Loss-sharing ratio: The government shares in eligible losses after realizations on security. Its share of eligible losses for loans in default is 85 percent. Lenders are responsible for the remaining 15 percent.
Cap on claims: Each lender has a separate account of registered loans. The Government of Canada's obligation to an individual lender is to pay eligible claims (i.e., 85 percent of the eligible losses) on defaulted loans in its account, up to a maximum of the aggregate of 90 percent of the first $250 000 in loans registered, 50 percent of the next $250 000 and 10 percent of all loans in excess of $500 000.
Assets financed: Loans are restricted to financing: (1) purchase of leasehold improvements, equipment, software and real property or immovables; (2) improvement to equipment and real property; and (3) program registration fees.
Percentage of asset cost financed: The maximum amount of financing available is 90 percent of the cost of the assets.
Fees: A one-time, up-front fee of 2 percent of the amount financed is paid at the time of registration. This fee can be included in the CSBF loan. In addition, the lender is charged an annual fee of 1.25 percent on outstanding loan amounts. Lenders may pass this fee on to borrowers only as part of the interest rate charged on loans.
Maximum interest rate: The maximum floating rate is the lender's prime rate plus 3 percent (including the 1.25 percent annual fee). The maximum fixed rate is the lender's residential mortgage rate plus 3 percent (including the 1.25 percent annual fee).
Maximum financing amount: A borrower cannot have more than $250 000 in total loans outstanding under both the SBL and CSBF programs.
22 Program parameters listed in Appendix B are those that were in place during the 2004–09 lending period. As noted earlier in this document, changes to the cap on claims and maximum loan size were implemented as of April 1, 2009.
23 Businesses involved in farming and businesses having as their principal objective the furtherance of a charitable or religious purpose are excluded from the program.
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