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ARCHIVED—Canada Small Business Financing Act
Annual Report 2010-2011
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2. Program Requirements
The CSBF Program operates according to the following major requirements:
Small business eligibility: The businesses must be for-profit, carried on in Canada and have annual gross revenues of $5 million or less. Farming businesses and charitable or religious institutions are not eligible.
Assets financed: Loans under the CSBF Program must be used to finance the purchase or improvement of real property or equipment, the purchase of leasehold improvements or the financing of program registration fees.
Maximum financing amount: A borrower cannot have more than $500,000 (of which a maximum of $350,000 can be used to finance the purchase or improvement of equipment or leasehold improvements) in total loans outstanding under the CSBF Program.
Percentage of assets financed: The maximum amount of financing available is 90 percent of the eligible cost of the assets.
Maximum interest rate:
- Floating rate: the maximum is the lender's prime rate plus 3 percent (includes the 1.25-percent administration fee).
- Fixed rate: the maximum is the lender's single family residential mortgage rate plus 3 percent (includes the 1.25-percent administration fee).
Length of term: The maximum term for any loan is 10 years from the date the first payment of principal and interest is scheduled to be made.
Fees:
- A fee of 2 percent of the amount financed is paid at the time of registration. This fee can be included in the CSBF loan.
- An annual administration fee of 1.25 percent is paid on outstanding loan amounts. This fee may be included as part of the interest rate charged on loans.
Loss-sharing ratio: Eligible losses on loans are shared as follows: 85 percent government and 15 percent lender.
Cap on claims: For each five-year period commencing April 1, 1999, 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 up to a maximum of the aggregate of:
- 90 percent of the first $250,000 in loans registered; plus
- 50 percent of the next $250,000; plus
- 12 percent of all loans in excess of $500,000 for loans made on or after April 1, 2009
(10 percent for loans made before April 1, 2009).
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