Interactive Presentation

Are you looking for a loan to start or grow your small business? The Canada Small Business Financing Program (CSBFP) could help. By sharing the risk with your financial institution, the Program may help you secure up to $1 million for the establishment, expansion or improvement of your small business.

Find out about the eligibility criteria, applicable fees and the application process!

For any comments or questions please contact us.

Transcript—Canada Small Business Financing Program

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Canada Small Business Financing Program

(Image of a business woman with workers from various trades in the background)

Hello, I would like to welcome you to this presentation on the Canada Small Business Financing Program and how it works. This 10 minutes presentation will be followed by a quick review of the key points.

Let's get started!

This video presentation will explain the CSBFP and how the program can help your business.

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Overview

  • The CSBF Program
  • Eligibility and Other Criteria
  • Interest, Fees and Security
  • How to Apply
  • How the Program Operates
  • What's in it for Small Businesses
  • How to Reach Us

I'll outline in this presentation, among other things, the eligibility criteria, how to apply and how the program operates. I'll also provide information about the advantages of this program for small businesses.

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The CSBF Program

  • Makes it easier for small businesses to obtain loans

The CSBFP makes it easier for small businesses to obtain loans from financial institutions as the risk is shared between Innovation, Science and Economic Development Canada and the lenders. The loans can be used for the establishment, expansion, modernization and improvement of small businesses.

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  • Provided access to financing worth over $15 billion

Since 1999, the program has assisted more than 148,000 businesses with loans totaling about $15 billion to date.

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  • Operates in all provinces and territories

The program is delivered across Canada by a network of lenders which includes chartered banks, credit unions and caisses populaires.

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  • Helps create jobs

The program also exists to stimulate economic growth and create jobs among small and medium-sized enterprises.

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Eligibility and Other Criteria

  • Start-ups and existing businesses operating for profit
  • Maximum gross annual revenue

With regards to the eligibility and other criteria, the CSBFP is available for start-ups and small businesses operating for profit in Canada with a gross annual revenue of 10 million dollars or less.

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  • Eligible type of business structure

A borrower can be a sole proprietor, a partnership, a corporation or a cooperative.

Non-eligible businesses are farming, religious and charitable organizations and not-for-profit organizations.

For farming businesses, there's a similar program offered by Agriculture Canada under the Canada Agriculture Loans Act program.

Businesses that provide services incidental to agriculture, such as veterinary services, are eligible.

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  • Eligible assets

Assets that can be financed are real property, such as land and buildings, leasehold improvements and equipment.

The percentage of financing available and the borrower's initial investment required are negotiated between the borrower and the lender on a case by case basis.

Franchise fees, advertising, labour, permits and working capital, among other things, are not eligible for financing under this program.

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  • Maximum amount of the loan

The maximum amount of the loan is $1 million of which no more than $350,000 can be used for leasehold improvements and equipment.

A business may also have several CSBFP loans for which the total outstanding amount does not exceed $1 million. For example, a business may finance $100,000 for equipment and $900,000 for real property. But the maximum amount financed for equipment and leasehold improvements may not exceed $350,000. With this criterion in mind, it is not permitted to finance $600,000 on equipment and $400,000 on real property.

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Interest, Fees and Security

  • Maximum Interest Rate

The maximum interest rate is the prime lending rate of the financial institution + 3% for a variable rate.

For a fixed rate, it's the single family residential mortgage rate + 3%. Note that the lender will remit to Innovation, Science and Economic Development Canada an annual administration fee of 1.25% of the monthly outstanding loan balance average.

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  • Applicable Fees

There's a one-time 2% registration fee that must be paid by the borrower. This fee can be financed as part of the loan. The CSBFP collects fees to offset the cost of the claims. Lenders fees may also apply and they cannot be financed.

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  • Required Security

For the securities, it's mandatory for the lender to obtain a primary security on the assets financed.

They can also take an unsecured personal guarantee up to the original amount of the loan. If there is more than one borrower, the personal guarantee may be joint and several, which means that all borrowers or guarantors are responsible for the amount loaned. This remains at the discretion of the lender. In this case, if there is default on the loan, the lender will realize on the personal guarantees prior to submitting a claim for loss to Innovation, Science and Economic Development Canada.

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How to Apply

  • Where to present your business plan

To apply, start-ups and small businesses must present their business plan directly to their bank, credit union or caisse populaire.

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  • Who makes the credit decision

Lenders are responsible for all credit decisions as well as the day to day oversight of the loan. It's important to note that the funds disbursed are those of the lender and not Innovation, Science and Economic Development Canada.

Also note that it's possible that a commercial loan officer is not aware of the program and its criteria. In this case, you may refer them to the CSBFP website or ask them to contact us.

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To find a participating lender in your region, please visit our website and click on the 'Find a lender near you' hyperlink.

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How the Program Operates

  • Role of Innovation, Science and Economic Development Canada

This slide explains the roles of Innovation, Science and Economic Development Canada and the lenders. For instance, Innovation, Science and Economic Development Canada's role is to design the program and legislation, ensure awareness of the program, as we are doing through this presentation, register loans and collect registration and administration fees, review and pay lender's claims for losses on defaulted loans and to ensure compliance.

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  • Role of Lender

As for the lenders, they make credit decisions and disburse funds, they apply the same due diligence as for conventional loans, they register loans, remit registration fees and report and pay administration fees and, finally, they realize all securities and guarantees before submitting a claim for loss.

The program requires that the lender respect its own loan criteria for the approval of the loan. Therefore, it's possible that the lender will reject a loan application if some internal loan criteria are not met or if the lender considers the risk to be too high.

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  • Loan loss sharing in the event of loan default

In terms of eligible losses, the government guarantees 85% of the net eligible losses. If there is default on a loan, the lender will sell all the assets it has as collateral on the loan and realize on the personal guarantees. If there is still an outstanding amount after realization, the lender claims 85% of the net eligible losses from Innovation, Science and Economic Development Canada and will absorb the remaining 15% of the loss.

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What's in it for Small Businesses?

  • Helps obtain loans

Now, what are the advantages for small businesses?

The Program helps businesses obtain loans that would not otherwise be available to them or that would be obtained under less favourable terms.

Lenders tend to use the CSBFP to make loans for higher risk industries, franchises and start-ups. For lower risk projects, lenders will use their own business loan products.

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  • Leasehold improvements may be financed

Considering that leasehold improvements have no value when the loan is in default, lenders prefer financing this type of project through the CSBFP.

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  • Amount of financing negotiable with the lender

Also, the level of financing is negotiable between the lender and the borrower.

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Key points

Thank you for this presentation. Before we conclude, I would like to discuss some important points.

Certainly.

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  • The CSBFP is a loan program

It's important to highlight that this is a loan program and that this loan must be repaid in full by the borrower.

That's correct. It's a partnership between the federal government and financial institutions that provides access to financing which must be repaid in full.

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If you are looking for grants or for information on other programs and services available for small businesses, please visit Canada Business at www.canadabusiness.ca.

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  • Start-ups and existing businesses are eligible

Start-ups and existing businesses are eligible. What are the other eligibility criteria?

If you're a start-up or a small business operating for profit in Canada and you have a gross annual revenue of $10 million or less, you may be eligible.

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  • The CSBFP can be used to purchase assets

Another important point is that this program can only finance the purchase of tangible assets.

Yes. You can finance equipment, commercial buildings and leasehold improvements.

Operational expenses such as inventory, salaries and working capital, among other things, are not eligible.

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  • Apply for a CSBFP loan through your financial institution

So to participate, borrowers need to communicate with their financial institution.
Exactly, you must present your business proposal directly to a financial institution of your choice. Funds disbursed are those of the financial institution therefore decisions related to approving loans rest entirely with the lenders.

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To find a participating commercial lender near you, visit our website at www.ic.gc.ca/csbfp and click on the Find a lender near you hyperlink. I would suggest you call the lender first to make an appointment to discuss your financing needs.

And what if a particular financial institution does not participate in the program?

Although most lenders do participate, it's possible that a specific branch is not aware of the program. You may refer their account manager to our toll free number for guidance. You also have the option of presenting your project to a different lending institution.

In conclusion, this program helps access loans that would not otherwise be available. If you are able to access a conventional loan, you may decide which loan product is best for your business.

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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
Print our pamphlet
For more information or for other resources, visit our website at www.ic.gc.ca/csbfp.

That now concludes the presentation. If your questions were not all answered during this presentation, you may want to talk directly to one of our representatives. We can be reached through our toll free information line or by email.

You may also download a brochure from our website. Or if you represent a business support organization, you can order our brochure and request our web icon for your website.

Once again, we would like to thank you for listening to the Canada Small Business Financing Program presentation!

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Presentation Slides

Overview

The CSBF Program

  • Makes it easier for small businesses to obtain loans
  • Provided access to financing worth over $15 billion
  • Operates in all provinces and territories
  • Helps create jobs

Eligibility and other criteria

  • Start-ups and existing businesses operating for profit
  • Maximum gross annual revenue
  • Eligible type of business structure
  • Eligible assets
  • Maximum amount of loan

Interest, fees and security

  • Maximum interest rate
  • Applicable fees
  • Required security
  • Optional security

How to apply

  • Where to present your business plan
  • Who makes the credit decision
  • 'Find a lender near you' www.canada/csbfp

How the Program operates

  • Role of Innovation, Science and Economic Development Canada
  • Role of lender
  • Loan loss sharing in the event of loan default

What's in it for small businesses?

  • Helps obtain loans
  • Leasehold improvements may be financed
  • Amount of financing negotiable with the lender

Key points

  • The CSBFP is a loan program
  • Grants and other government programs: www.canadabusiness.ca
  • Start ups and existing businesses are eligible
  • The CSBFP can be used to purchase assets
  • Apply for a CSBFP loan through your financial institution
  • Map of financial institutions: www.canada.ca/csbfp

How to reach us

Canada Small Business Financing Program
235 Queen Street
Ottawa, Ontario K1A 0H5
Toll-free: 1-866-959-1699
Fax: 1-343-291-1837

Print our pamphlet

For more information or for other resources, visit our website at www.canada.ca/csbfp


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