Canada Small Business Financing Program (CSBFP) Loan

Get the money you need to start or grow your business with a Canada Small Business Financing Program (CSBFP) Loan. 

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If you need money to establish or expand your small business, you might like to consider the Canada Small Business Financing Program (CSBFP). These loans are backed by the government, so you can get access to funding you might not be able to qualify for on your own. They also come with some of the most competitive interest rates on the market.

Find out more about how these loans work, what you can use them for and which businesses might be eligible.

What is a CSBFP loan?

A Canada Small Business Financing Program (CSBFP) Loan is a loan that’s partly backed by a government guarantee. This means that if you can’t pay back the loan for some reason, the Canadian government will assume and repay a portion of the debt you owe.

You’ll be able to use the money you borrow to purchase or improve business assets like land, buildings, equipment and leasehold agreements. However, you won’t be able to use the loan to fund day-to-day operations like payroll, inventory or other expenses.

Who can qualify for a CSBFP loan

Since CSBFP loans are issued directly by the bank, it will be up to them to set specific eligibility requirements for approval. That said, the Canadian government requires you to meet the following criteria to qualify with the bank before they can even begin their own process.

  • Business status. Your business must operate (or be about to operate) in Canada.
  • Annual revenue. You’ll need to make less than $10 million in gross revenue in the year you apply.
  • Business type. You must be a for-profit business, which means businesses like farms, charities and religious enterprises won’t be eligible.
  • Loan use. You’ll only be able to use loans to purchase and improve eligible business assets.

From there, it’s up to you and your lender to negotiate the amount of financing you’ll receive. Keep in mind, the maximum loan amount you can get is $1,000,000.

How do CSBFP loans work?

CSBFP loans work like any traditional business loan from a bank – but they often come with more paperwork and eligibility criteria. When you apply, the bank gets to decide whether you qualify and how much money you should receive. The government doesn’t get involved in this decision-making process nor does it process loan applications.

The role of the government is to provide the bank and the borrower (that’s you!) with a guarantee that it will help repay a portion of your loan if you default. Because of this, banks are more likely to give you a larger amount of money than they typically would if you were applying for a loan on your own. That’s because they know the government will pay them back if you can’t make your payments.

Interest and fees

Interest rates can be variable or fixed. For a variable rate, the maximum chargeable rate is the lender's prime + 3%. For a fixed rate, the maximum is the lenders' single family residential mortgage rate + 3%. You’ll also face a one-time 2% registration fee, plus the lender may charge any fees that they would typically charge for a conventional loan of the same amount.

Low interest rate business loans

How much of my loan will be guaranteed by the government?

In some cases, the government may guarantee up to 75% of your loan with a CSBFP loan. But you could also be required to back a part of your loan with your credit score or some form of collateral. This means you will still have financial consequences for defaulting even if you don’t have to repay the full amount of your loan.

Where can I get a CSBFP loan?

You can get this type of loan from qualified banks, credit unions, caisses populaires and other financial institutions eligible to make loans under the CSBFP. You may need to submit a business proposal before you can be approved in addition to other eligibility criteria.

You can visit Canada’s Business and Industry website for more information about the program requirements and criteria. Also keep in mind that you’ll probably need a good or excellent credit score to apply, and you’ll have to fulfill additional criteria with your bank.

Is a CSBFP loan right for my business?

Whether a CSBFP loan is right for your business depends on what kind of business you have as well as what you intend to spend the money on. The following is a list of some of the factors you should look at before you lock in this type of loan.

Consider a CSBFP loan if

  • You’re looking to purchase assets. This loan will allow you to buy equipment, software, property and other assets for your business.
  • You want low rates. With a government-backed guarantee, CSBFP loans offer some of the best rates on the market.
  • You need a large amount of money. Loan amounts can be as high as $1,000,000, depending on what you need the money for.
  • You have good credit. These loans will require a good to excellent credit rating if you want to qualify.
  • You can contribute your own capital. You’ll need to be able to fund a portion of your purchase out of your own pocket (at least 25%).
  • You’re ready to pay a registration fee. You’ll have to pay a 2% registration fee, plus the lender may charge any fees that they would typically charge for a conventional loan of the same amount.

Look elsewhere if

  • You need emergency funding. You won’t be able to get your hands on this money quickly due to the rigorous application and approval process.
  • You require money to cover day-to-day expenses. You are not permitted to use the money you borrow to pay for daily business expenses like payroll or inventory.
  • Your business can fund the project itself. You won’t be able to qualify for a CSBFP loan if you can show that your business has the means to pay for the assets you want to buy without taking out a loan.
  • You have bad credit. Since the approval is up to the bank, you’ll likely need a good to excellent credit rating to qualify for this loan.

Compare other business loans available in Canada

If you’ve been rejected for a CSBFP loan, you’re looking for a simpler application process or you need more flexible funding, you might like to consider a business loan from an online lender.

Name Product Interest Rate Min. Loan Amount Max. Loan Amount Loan Term Minimum Revenue Min. Credit Score Filter Values
SharpShooter Funding Business Loan
5.49% - 22.79%
$1,000
$300,000
6 months - 5 years
$5,000 /month
450
SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $5,000 in monthly deposits ($60,000/year).
OnDeck Business Loan
8.00% – 29.00%
$5,000
$300,000
6 - 18 months
$10,000 /month
600
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.
Lending Loop Business Loan
4.96% - 26.50%
$1,000
$500,000
3 months - 5 years
$100,000 /year
600
Lending Loop offers personalized loans up to $500,000 for small business owners who have been in business for at least one year and can show an annual revenue of at least $100,000.
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Bottom line

CSBFP loans may be suitable for you if you need a large amount of money to purchase assets for your business. These loans are typically reserved for borrowers with good credit and are backed by the government in case you’re unable to pay back the full amount of your loan. Because CSBFP loans are backed by the government, you may be able to get one more easily than other types of business loans, although you’ll likely need a good credit score to apply.

To learn more about business loans and to compare your options, check out our full guide here.

Frequently asked questions about CSBFP loans

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