Government Business Loans

All you need to know about small business funding in Canada.

Government business loans are available to Canadian business owners who are looking for financing. Although the Canadian government has many different programs in place to help all businesses, they tend to focus on providing small business loans the most. After all, keeping small to medium-sized  businesses afloat helps add to local economies and makes the country a more diverse and interesting place to live.

Government small business loans maybe a viable option for Canadian entrepreneurs looking to grow their business. Here is some information about Canada’s loan program to help finance small businesses, known as the Canada Small Business Financing Program, or CSBFP.

Who IS Eligible?

Just about everyone in Canada who has a startup or small business generating less than $10 million per year in revenue can qualify for the CSBFP. You are eligible for financing whether your business is a corporation or a sole proprietorship. You can use government small business loans to purchase land or buildings, to purchase equipment, to pay for business registration fees, and even to renovate a leased property. In some cases, you can even use the funds to purchase an existing business.

Who is NOT Eligible?

Anyone running an existing business in Canada generating more than $10 million per year in revenue cannot take advantage of the CSBFP. The program is also not available to the farming industry; the Canadian government has other programs in place for farm-based loans and subsidies. You cannot use the funds provided by the CSBFP to fund things such as franchise fees, assets required by a holding company, goodwill, inventory, or working capital. This is not a complete list; if you have questions about how these funds can be used, please speak with your financial institution.

What are the loan criteria?

There are several criteria in place for dispersing and utilizing the CSBFP. Some of these criteria include:

  • There is a maximum loan amount of $1 million. No more than $350,000 of that $1 million can be used for purchasing equipment or leaseholder improvements.

  • There is a registration fee that totals 2% of the entire value of the loan. However, you can finance that registration fee along with the loan.

  • The interest rate varies. If it is fixed, the rate is equal to the lender’s single family mortgage rate plus 3%. If it is variable, the rate is equal to the lender’s prime lending rate plus 3%.

  • Lenders reserve the right to charge the same fees that they would charge for conventional loans of the same amount. You must pay these fees to the lender, and you cannot finance the charges as part of the CSBFP.

Where can you apply for government business loans?

In order to apply for the CSBFP, you can visit your bank, credit union, or private lender. You will be required to present your business proposal to that lender, and the decision regarding the loan is up to the lender. This is because you will receive funds directly from the lender rather than the Canadian government if you are approved; the government simply secures the loans on behalf of that lender to help mitigate the risks involved. Not all banks and credit unions participate, but the majority of them do.

What other small business loan options are avaiable?

The CSBFP is a great way to help you obtain the funding you need for your small to medium business. Thousands upon thousands of Canadian companies qualify for the program. However, if you are denied based on your credit, there are still other Canadian loan options available. These options include getting a small business loan or a merchant cash advance.

If you are looking for small business financing, Thinking Capital can get you qualified. Just fill out the short application, and find out how much funding your business can receive. Once approved, your funds will be deposited straight into your business bank account in as little as 24 hours. The process is that simple.