Small businesses play a crucial role in Canada's economy, creating jobs and contributing to local communities. However, many small businesses struggle to access the funding they need to start or grow their operations. That's where the Canada Small Business Financing Program (CSBFP) comes in.
The CSBFP is a federal government program that helps small businesses get loans from financial institutions by sharing the risk with lenders. Over the past decade, the program has provided over 53,000 loans to small businesses, totalling $10 billion.
Eligibility for the CSBFP
To be eligible for the CSBFP, your business must operate in Canada and have gross annual revenues of $10 million or less. Start-ups are also eligible.
Available Financing
The CSBFP provides financing of up to $1.15 million for small businesses, with several categories of financing available:
Up to $1,000,000 for term loans, which can be used for purchasing or improving land or buildings used for commercial purposes, purchasing or improving new or used equipment, and purchasing or improving new or existing leasehold improvements. Of that amount, up to $150,000 could be used for intangible assets and working capital costs.
Up to $150,000 for lines of credit, which can be used to pay for working capital costs, such as day-to-day operating expenses.
Interest Rates and Fees
The interest rates for term loans are determined by the financial institution and may be floating or fixed. For floating rates, the maximum chargeable is the lender's prime lending rate plus 3%, while for fixed rates, the maximum chargeable is the lender's single-family residential mortgage rate for the term of the loan plus 3%. For lines of credit, the maximum chargeable is the lender's prime lending rate plus 5%.
A 2% registration fee is required for both term loans and lines of credit, based on the total amount loaned or authorized. The fee can be paid upfront or included in the loan amount, as long as it does not exceed the maximum limit of the corresponding loan category.
CSBFP program is a great opportunity for small businesses to access the financing they need to succeed. At MyDreamFinance, we can help you with every step of the application process. We can help you draft up a business plan and build financial models to demonstrate your ability to repay the loan. We can also introduce you to a variety of alternative financing options and help you choose the right option for your business.
Contact us today to learn more about how we can help you take advantage of the CSBFP program!
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