Help small businesses get loans

Help small businesses get loans

Canada’s Small Business Financing Program helps small businesses obtain loans from financial institutions by sharing risk with lenders.

In the last 10 years, small businesses have received more than $ 9.5 billion in asset-backed financing, representing more than 63,000 loans.

Who is eligible?

Small Canadian start-up or for-profit businesses with gross annual sales of $ 10 million or less.

The following are not eligible for this program: farms (for a similar program for the agricultural sector, visit www.agr.gc.ca), non-profit organizations, and charities and religious organizations.

How much can be borrowed?

A borrower can obtain up to $ 1 million of which up to $ 350,000 can be used for leasehold improvements, leasehold improvements and for the purchase or improvement of new or used equipment.

How to apply for a loan?

Financial institutions offer the program and are fully responsible for loan approval.

Discuss the needs of your business with a financial agent at a bank, credit union or Canadian credit union. The agent will review your business plan and make a decision about your loan application. Once the decision is made to provide funding under the program, the financial institution will disburse the funds and register the loan with Innovation, Science and Economic Development Canada. (Find a lender near you)

What can be financed?

What can be financed?

Loans can be used to finance the following costs:

Loans can be used to finance the following costs:

  • the purchase or improvement of land or buildings used for the operation of a business;
  • the purchase or improvement of new or used equipment;
  • the purchase of new or existing leasehold improvements, that is, renovations to premises rented by the tenant.

For example, you can use a loan to finance:

  • commercial vehicles;
  • hotel and restaurant equipment;
  • computer hardware, software and telecommunications equipment;
  • production equipment;
  • eligible costs for the purchase of a franchise.

However, you can not use a loan to finance:

However, you can not use a loan to finance:

  • a commercial fund;
  • working capital;
  • stocks;
  • franchise fees;
  • research and development.

What are the fees?

The interest rate is set by your financial institution and can be variable or fixed.

  • Variable Rate: The applicable maximum is the lender’s prime rate plus 3%.
  • Fixed rate: The maximum applicable is the mortgage rate for single-family residences of the lender of the same duration as the loan plus 3%.

The borrower must also pay the lender registration fees of 2% of the total amount loaned under the program. The rights can be financed by the loan.

The lender transfers registration fees plus a portion of the interest earned to Innovation, Science and Economic Development Canada to help offset program costs for the government.

What are the terms of financing?

Lenders must obtain a security interest in the financed asset. They may also take an additional personal guarantee without security.

For more information, contact your financial institution. (Find a lender near you)

This program is administered by the Small Business Financing Branch. For more information, contact us.

Other resources

The Government of Canada offers other sources of funding and can help you protect your intellectual property, obtain permits and licenses, and sell your products and services across borders – even to us!