Canada Small Business Financing Program (CSBFP): How to Apply + Eligible Uses

Canada Small Business Financing Program (CSBFP): How to Apply + Eligible Uses

Getting approved for a traditional bank loan can be difficult, especially if your business is new or growing quickly. The Canada Small Business Financing Program (CSBFP) helps by sharing risk with lenders. This makes it easier for small businesses to get financing. The program supports businesses with annual revenues of $10 million or less and is available in every province and territory.

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What Is the Canada Small Business Financing Program?

The Canada Small Business Financing Program is a federal loan guarantee program. It is not a grant. The Government of Canada does not lend money directly. Instead, it guarantees part of the loan issued by a bank or credit union. This encourages lenders to approve loans they might otherwise decline.

There are two main CSBFP options:

• Term loans for big purchases and improvements
• Lines of credit for working capital

Because the loan is backed by the government, lenders may be more flexible about collateral or business history than they would be with regular commercial loans.

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CSBFP Eligibility Requirements

Your business must meet all of the following criteria to qualify for the CSBFP:

• Operate for profit in Canada
• Have gross annual revenues of $10 million or less
• Be a small business or startup (incorporated or unincorporated)
• Apply through a participating financial institution (banks or credit unions)

Businesses that are not eligible:

• Farming businesses (these must use the Canadian Agricultural Loans Act Program)
• Charities and non-profits
• Businesses mainly operating outside Canada

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How Much Can You Borrow Under the CSBFP?

The CSBFP sets clear limits based on how you use the funds:

Term Loans

• Up to $1 million for buying or improving real property
• Within that $1 million:
  • Up to $500,000 for equipment and leasehold improvements
  • Of that $500,000, a maximum of $150,000 can be used for intangible assets and working capital

Line of Credit

• Up to $150,000 for working capital costs like operating expenses

Fees and interest:

• 2% registration fee on the loan amount (usually added to the loan)
• Interest rates are capped at:
  • Prime + 3% for floating-rate term loans
  • Prime + 5% for lines of credit

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Eligible Uses of CSBFP Funds

The Canada Small Business Financing Program supports expenses that help your business grow. It is not meant for day-to-day survival.

Eligible expenses include:

• Buying or renovating commercial real estate
• Purchasing new or used equipment
• Leasehold improvements
• Buying intangible assets (software, licences, franchises)
• Working capital costs (within program limits)

Ineligible expenses include:

• Inventory purchases beyond the working capital limit
• Refinancing existing debt
• Goodwill
• Franchise fees that exceed program caps

For a broader breakdown, see also:

• What Business Expenses Are Eligible Across Canadian Grants and Loans?

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How to Apply for the Canada Small Business Financing Program

You do not apply directly to the federal government. Applications are handled by lenders.

Step-by-step application process:

1. Prepare your documents

   • Business plan or growth plan
   • Financial statements or projections
   • Details about the assets you want to purchase

2. Contact a participating lender

   • Most major Canadian banks and many credit unions participate

3. Lender assessment

   • The lender reviews your application and decides if you qualify

4. Loan registration

   • If approved, the lender registers the loan under the CSBFP

Approval timelines depend on the lender, not the government. Tools like GrantHub’s eligibility matcher can help you check if CSBFP and other grants fit your business needs.

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Common Mistakes to Avoid

• Thinking CSBFP is a grant
  This is a loan you must repay. Plan your budget for repayments right away.

• Applying for ineligible expenses
  CSBFP rules are strict. Inventory and debt refinancing often cause rejections.

• Only contacting one lender
  Each bank looks at risk differently. If one lender says no, try another.

• Ignoring stacking rules
  Some grants can be combined with CSBFP loans, but not all. Always check for compatibility.

See also:

• How to stack grants and loans without violating funding rules

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Frequently Asked Questions

Q: Is the Canada Small Business Financing Program a grant or a loan?
It is a government-backed loan, not a grant. You must repay the full amount plus interest, based on your lender’s terms.

Q: Do startups qualify for the CSBFP?
Yes. Startups in Canada with revenues under $10 million are eligible, if they meet lender requirements.

Q: Do I apply to the government for a CSBFP loan?
No. You apply through a participating bank or credit union, not through a federal portal.

Q: How long does CSBFP approval take?
Timelines depend on the lender and your documents. Some approvals take a few weeks, others longer.

Q: Is interest on a CSBFP loan tax deductible?
Often, interest can be deducted as a business expense. Ask your accountant to be sure.

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Next Steps

The Canada Small Business Financing Program can help your business grow. It works well with non-repayable grants or regional funding. GrantHub tracks thousands of grant and loan programs across Canada and helps you find options that fit your industry, location, and plans. Before applying, compare your eligibility for CSBFP and other funding sources to make the best choice for your business.