In short
- The CSBFP is a federal program run by ISED. Banks, credit unions and caisses populaires make the loans and decide who gets one.
- Start-ups and existing businesses in Canada with gross annual revenues of $10 million or less can apply; farming businesses cannot.
- The program page lists up to $1.15 million per borrower: $1,000,000 in term loans and $150,000 in lines of credit, with sub-limits by use.
- Rates are capped by the program, and there is a 2% registration fee that can be financed. The trade-off is a slower, more document-heavy process.
Our page on the Canada Small Business Financing Program gives a quick overview. This guide goes further: what the loan limits mean in practice, how the rate caps work, what security the lender will take, what the program costs you and how to approach a lender. Every program figure below comes from the official Innovation, Science and Economic Development Canada (ISED) pages, which we link to. Program rules change, so check those pages before you rely on any figure.
This is general information, not legal, tax or accounting advice.
What the program is, and what it is not
The CSBFP makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. That wording, from the official program page, is the key to understanding it.
- It is not a government loan. The ISED FAQ is clear that if a loan is approved, the money is the financial institution's, not the government's.
- You do not apply to the government. You present your business proposal to a bank, credit union or caisse populaire. The FAQ says ISED does not accept or process loan applications and does not take part in lending decisions.
- The lender decides. Financial institutions are solely responsible for approving the loan, and they are required to apply the same care as they would to a conventional loan of a similar amount.
In other words, the program changes the lender's risk, not its standards. A lender that would never consider your business is unlikely to change its mind because of the program, but a lender that is on the fence may be more willing to say yes, or to offer a longer term.
Who can apply
According to the ISED FAQ for small businesses, most start-ups and existing for-profit, not-for-profit and charitable small businesses in Canada with gross revenues of $10 million or less are eligible. They can be corporations, sole proprietors, partnerships or cooperatives.
Two exclusions are worth knowing:
- Farming businesses are not eligible. The FAQ points them to the Canadian Agricultural Loans Act program instead.
- Share purchases and assets bought by a holding company cannot be financed. The FAQ notes this list is not exhaustive.
The fact that start-ups are eligible matters, because most private financing needs a year or more of history. Our guide on startup business funding covers this in more detail.
How much you can borrow
The official program details set these limits per borrower:
| Limit | Amount |
|---|---|
| Maximum per borrower, all CSBFP financing | $1.15 million |
| Term loans | Up to $1,000,000 |
| Within term loans: leasehold improvements and equipment | Up to $500,000 |
| Within that: intangible assets and working capital costs | Up to $150,000 |
| Lines of credit | Up to $150,000 |
The limits are nested, which confuses a lot of people. The $1,000,000 term loan limit is the outer box. Inside it, no more than $500,000 can go to equipment and leasehold improvements, and inside that, no more than $150,000 to intangible assets and working capital. Real property, meaning land and commercial buildings, can use the rest of the $1,000,000. The line of credit is a separate $150,000 on top of the term loans, and the 2022 changes bulletin notes it is over and above the $150,000 that can go to working capital under a term loan.
These are program maximums, not what you will be offered. The FAQ says the borrower and lender negotiate the amount. The lender will size the loan from your cash flow and security, the same way it would any loan. Our guide on how much your business can borrow walks through that math.
What it can pay for
According to the ISED FAQ, term loans can finance:
- The purchase or improvement of real property used for commercial purposes
- The purchase or improvement of new or used equipment
- New or existing leasehold improvements, meaning renovations a tenant makes to leased space
- Intangible assets
- Working capital costs
- The registration fee itself
The 2022 changes bulletin gives examples. Intangible assets include franchise fees, goodwill, incorporation costs and certain permits and licences. Working capital costs include inventory, website and software development, printed materials, professional fees, payroll and rent. The program details page adds examples such as commercial vehicles, restaurant equipment, computer equipment and the cost of buying a franchise.
Lines of credit can finance working capital costs and the registration fee. The FAQ also says the purchase of eligible assets of an existing business may qualify, financing the lesser of the purchase cost and the appraised value of those assets.
Rates: how the caps work
The program does not set your rate. The lender does, within caps. According to the official pages:
- Floating-rate term loans: at most the lender's prime lending rate plus 3%.
- Fixed-rate term loans: at most the lender's single-family residential mortgage rate for the term, plus 3%.
- Lines of credit: at most the lender's prime lending rate plus 5%.
Because the caps are tied to each lender's own reference rates, the ceiling moves as rates move and can differ slightly from one lender to another. The cap is a maximum, so it is worth asking more than one lender.
Fees
- Registration fee: 2% of the amount loaned for term loans, or of the amount authorized for lines of credit. The borrower pays it to the lender, and it can be financed.
- Lender fees: the FAQ says lenders may charge the same fees they charge on a conventional loan of the same amount, such as set-up and renewal fees. These are paid to the lender and cannot be financed under the program.
- Administration fee: the 2022 bulletin states that a 1.25% annual administration fee on end-of-month loan balances continues to apply. Ask your lender how it is reflected in your pricing.
Terms and security
The 2022 bulletin says term loans for real property, leasehold improvements, equipment, intangible assets and working capital can be made for a maximum 15-year term. A line of credit has a maximum term of 5 years, after which it can be re-registered with a new 2% fee or converted to a term loan under conditions set out in the bulletin.
On security, the program details page says:
- For real property and equipment, the lender must take security on the assets financed.
- For leasehold improvements, software, intangible assets, working capital and lines of credit, the lender must take security on business assets.
- The lender may also take an unsecured personal guarantee.
Read any personal guarantee carefully and understand what it means for you personally before you sign.
A worked example
These numbers are illustrative only. Your rate depends on the lender, the program caps on the day and your file.
A restaurant in Ontario wants $300,000 for new kitchen equipment and a dining-room renovation. That falls within the $500,000 equipment and leasehold improvement sub-limit. The 2% registration fee is $6,000. If the restaurant finances the fee, the loan becomes $306,000. At an illustrative 9% a year over 10 years, the payment would be about $3,876 a month. The lender will take security on the equipment and on business assets for the leasehold portion, and may ask for a personal guarantee.
The same restaurant could look at equipment financing, which is often faster but usually shorter, so each monthly payment is higher. Comparing both, in total dollars, is the honest way to choose.
How to apply
- Get your documents ready. Financial statements, tax filings and CRA notices, business bank statements, quotes for what you are buying and a short business plan or proposal. Our documents checklist covers Canada in detail.
- Ask your bank, credit union or caisse populaire about the CSBFP by name. The ISED FAQ says the majority of financial institutions participate, though not every one offers the line of credit product yet.
- If one lender says no, try another. The FAQ itself suggests this, since each lender uses its own criteria.
- Compare offers in total dollars: rate, all fees, term and security. See how to read a business loan offer.
When the CSBFP is the wrong tool
If you need money this week, it is not the right fit; lenders process these loans like conventional loans, which takes time. If your need is short-term cash flow, a line of credit or working capital product may fit better, at a higher cost. See how fast you can get business funding.
Where CELER Funding fits
CELER Funding is a free referral service, not a lender and not a program partner. We can refer you to lenders that offer CSBFP loans, alongside other options, so you can compare. The lender handles the application and makes the decision. We never charge you a fee; lenders may pay us a referral fee.
See our pages for Canada, Ontario, Quebec, British Columbia and Alberta, or compare with the US programs in SBA 7(a) vs 504. When you are ready, apply to get matched.