How Can I Get A Government Backed Financing For My Small Business – CSBFP
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04 Mar 2024
The maximum loan for one borrower is $1.15 million. There are restrictions on the amount of use, as follows:
For term loans:
For many small businesses and startups in Canada, CSBFP is a great financing option. However, some industries might benefit from it more than others.
Here are some good fits for the CSBFP:
How Can I Get A Government Backed Financing For My Small Business – CSBFP
Looking for financing options? Here is a $1 million government-backed finance option for you! If you are a small business/ startup, seeking consultation from a Business Planning Solution Canada firm, you would have already learnt about this option – Canada Small Business Financing Program (CSBFP). Whether you want to buy capital assets like buildings, equipment, or commercial land, or simply want to upgrade existing assets, CSBFP can be the right financing option for you. Besides, it is that time of the year when the expansion plan of the industry must have already kicked in, and many of your competing businesses might be looking into it. Read the blog further and get answers to these questions – what can I use the funds for, what are the benefits of CSBFP, what’s the borrowing limit, and more? If you are a business owner looking for an expert opinion on finances, don’t forget to book your first consultation for FREE with a CPA in Surrey Canada. Book Anytime!What is the CSBFP?
Canada Small Business Financing Program or CSBFP is a government-backed initiative that helps small businesses get loans from banks and credit unions by sharing the risk with these lenders. The aim of this facility is to increase the availability of financing for starting, expanding, and modernizing small businesses. In the last 10 years alone, more than 53,000 small businesses were given CSBFP loans, amounting to $10 billion in total.Who is eligible for CSBFP?
The Canada small business financing program requirements are as follows:- Your small business/ startup must operate in Canada.
- The gross revenue of the business/ startup must be ≤ $10 million.
How much can you get from CSBFP?
The maximum loan for one borrower is $1.15 million. There are restrictions on the amount of use, as follows:
For term loans:
- A maximum of $1,000,000 is available as a term loan for one borrower.
- From this amount, you can use up to $500,000 for things like improving leased property, getting new or used equipment, and upgrading your leasehold.
- From this $500,000, you can use up to $150,000 to cover the cost of intangible assets and working capital.
- Up to a maximum of $150,000.
How do I apply for a loan to start a business in Canada?
Apply for CSBFP in five easy steps:- Start by locating a bank, credit union, or Caisse populaire in Canada. Find a CSBFP lender near you.
- Next, talk to a financial officer there, share business details and why you need the loan. Add a business proposal of your plans.
- After that, the financial officer will review your loan application, and assess the viability of your proposal and your ability to repay the loan.
- Finally, if the decision is in your favor, the financial institution will disburse the funds. They are solely responsible for loan approval.
- At last, the loan will be registered with Innovation, Science and Economic Development Canada (ISED).
- While the program reduces risk for lenders, it doesn't guarantee approval. Your business still needs to meet the lender's eligibility criteria.
- Maximum loan amounts and specific terms may vary depending on the lender and your business profile.
How much is the registration fee for CSBFP?
- Term loans: There is a 2% registration fee, based on the total loan amount under the program.
- Lines of credit: One has to pay a 2% registration fee, based on the total amount authorized.
What expenses are eligible for financing?
You can use the funds for the following expenses:| Type of Loan | Uses & Example |
| Term Loan |
|
| Line of Credit | To pay for working capital costs, i.e., day-to-day business operating expenses. |
How much interest do I have to pay on a CSBFP loan?
| Type of Loan | Interest Rate Borrower Has To Pay |
| Term Loan | Your financial institution sets the interest rates for term loans, which can either be floating or fixed.
|
| Line of Credit | The highest allowable interest is the lender's prime lending rate plus 5%. |
For which sector will the Canada Small Business Financing Program offer the best benefits?
For many small businesses and startups in Canada, CSBFP is a great financing option. However, some industries might benefit from it more than others.
Here are some good fits for the CSBFP:
- Retail: To purchase inventory, upgrade equipment, or expand their storefronts.
- Manufacturing: For buying new machinery, equipment, or materials.
- Construction: To acquire equipment, vehicles, or materials.
- Technology: To develop new software and equipment, or buy new products or services.
- Tourism and hospitality: For renovating a facility, get new equipment, or expand the marketing reach.
