CSBFP Loan Canada: Government-Backed Small Business Financing

The Canada Small Business Financing Program lets small businesses borrow up to $1M with the government guaranteeing 85% of the risk.

What is the CSBFP?

The Canada Small Business Financing Program (CSBFP) is a federal loan guarantee program administered by Innovation, Science and Economic Development Canada (ISED). Under the program, the federal government guarantees 85% of any loss a lender suffers if a small business defaults. This dramatically reduces the risk for banks and credit unions, making them willing to approve loans they would otherwise decline.

The CSBFP is not a direct government loan — you still borrow from a bank or credit union, and the government backstops the risk. This means you apply directly at your bank, not through a government office.

CSBFP Key Details

Feature	Details
Maximum loan (equipment/leasehold)	$500,000
Maximum loan (with real estate)	$1,000,000
Government guarantee	85% of the loan
Registration fee	2% of total loan amount (added to loan)
Maximum interest rate (variable)	Prime rate + 3%
Maximum interest rate (fixed)	Residential mortgage rate + 3%
Maximum annual fee	1.25% of outstanding balance
Eligible businesses	Revenue under $10M/year

What Can CSBFP Funds Be Used For?

• Purchase or improvement of equipment and machinery
• Leasehold improvements (renovating a rented commercial space)
• Purchase of commercial real estate
• Intangible assets and working capital (expanded in 2022 amendments)
• Start-up costs for new businesses

Note: CSBFP funds cannot be used for goodwill, inventory, or working capital under the traditional program structure (though the 2022 amendments added limited working capital eligibility).

CSBFP Eligibility

• Operating for-profit in Canada
• Annual revenue of $10 million or less
• Farming businesses are not eligible (they have separate programs through Agriculture Canada)
• Charitable and religious organizations are not eligible

How to Apply for a CSBFP Loan

• Step 1: Approach your bank or credit union directly. Tell them you are interested in a CSBFP loan. Any chartered bank, credit union, caisse populaire, or cooperative credit society in Canada can participate.
• Step 2: Provide your business plan, financial statements or projections, and details on the assets to be purchased.
• Step 3: The lender evaluates your application using their standard credit criteria plus CSBFP program rules.
• Step 4: If approved, the lender registers the loan with the government and the 2% registration fee is added to your loan amount.
• Step 5: Funds are disbursed and you begin repaying the lender directly.

CSBFP vs BDC: Which is Better?

Both serve small businesses, but with different mechanics. CSBFP is delivered through private lenders (your existing bank relationship may help), while BDC lends directly. CSBFP may offer slightly lower rates for qualified borrowers; BDC is often more flexible on startups and businesses without traditional collateral. Many businesses use both — a CSBFP loan for equipment purchase and a BDC working capital loan for operations.