Canada Small Business Financing Program (CSBFP): limits, rate caps and fees in 2026
How the federal CSBFP works in 2026, who qualifies, loan limits, the prime plus 3% rate cap, the 2% registration fee, security rules and a worked example.
The Canada Small Business Financing Program (CSBFP) helps small businesses get loans they might not get on conventional terms: a participating bank, credit union or caisse makes the loan, and the federal government, under the Canada Small Business Financing Act, shares the lender's loss if it goes bad. Businesses with gross annual revenue of $10 million or less can borrow up to $1.15 million in total, including up to $1 million in term loans and a line of credit of up to $150,000. Rates are capped, and the borrower pays a 2% registration fee that can be financed. You apply to the lender, never to the government, and the lender alone decides.
This guide is part of the small business loan requirements and rates overview. Program figures are those published by Innovation, Science and Economic Development Canada (ISED); confirm them on the ISED site before you apply.
Who qualifies
- For-profit businesses, and also not-for-profit and charitable small businesses, operating in Canada, with gross revenue of $10 million or less.
- Start-ups as well as existing businesses.
- Corporations, sole proprietors, partnerships and co-operatives.
- Not eligible: farming businesses (they are directed to other programs, such as those of Farm Credit Canada) and some uses, such as buying shares or assets bought through a holding company.
What the money can be used for
| Use | Term loan | Line of credit |
|---|---|---|
| Commercial real property (buying, building, improving) | Yes | No |
| New or used equipment | Yes | No |
| Leasehold improvements | Yes | No |
| Intangible assets (for example software, website, franchise fees) | Yes, within the sub-limit | No |
| Working capital | Yes, within the sub-limit | Yes |
| The 2% registration fee | Yes | Yes |
Since the changes in force from 4 July 2022, ISED describes these limits: up to $1 million in term loans, of which up to $500,000 can go to equipment and leasehold improvements, and within that up to $150,000 to intangible assets and working capital; plus a separate line of credit of up to $150,000, for a total of $1.15 million per borrower and related borrowers. Term loans can run for up to 15 years. Lines of credit are registered for five-year periods.
Rate caps and fees
| Item | Rule published by ISED |
|---|---|
| Floating-rate term loan | Lender's prime rate + up to 3% |
| Fixed-rate term loan | Lender's single-family residential mortgage rate for the term + up to 3% |
| Line of credit | Lender's prime rate + up to 5% |
| Registration fee | 2% of the loan amount (or of the authorized line), can be financed |
| Annual administration fee | 1.25% a year on the outstanding balance, paid by the lender to the government and built into its pricing |
| Lender's own fees | Allowed at the same level as for a comparable conventional loan, paid to the lender and not financeable under the program |
The caps are maximums, not the rate you will get. A strong file can be priced below the cap.
Security and guarantees
Loans for real property and equipment are secured by the assets financed. Loans for leasehold improvements, intangible assets and working capital, and lines of credit, require security over the business's assets, usually a general security agreement. The lender can also ask the owners for a personal guarantee; ISED's 2014 changes removed the old 25% limit, so a guarantee can cover up to the original amount of the loan. Read collateral and personal guarantees before signing.
Worked example (illustrative)
A dental lab with $1.8 million in revenue wants $350,000 for new milling equipment and leasehold improvements. Its bank offers a CSBFP term loan at prime + 3%, with prime assumed at 5.2% for the example, so 8.2%, over 10 years.
- Registration fee: $350,000 x 2% = $7,000.
- The lab finances the fee, so the loan is $357,000.
- Blended payment over 10 years at 8.2%: about $4,369 a month, with about $167,300 of interest over the full term.
- If the bank instead uses fixed principal payments: $2,975 of principal a month, a first payment of about $5,415 and a last payment of about $2,995, with about $147,600 of interest.
- Financing the fee costs about $3,280 of interest over 10 years. Paying it in cash avoids that, if cash allows.
Check the fee arithmetic in the fee calculator and the payments in the payment calculator or fixed-principal calculator.
How to apply
- Prepare the documents in the application checklist, with quotes for the equipment or improvements.
- Ask your bank, credit union or caisse whether it offers CSBFP loans; ISED publishes a map of participating lenders. Not every branch handles many of them, so ask for someone who does.
- Compare the CSBFP offer with a conventional offer and, where relevant, a BDC offer on total cost and terms, using comparing two loan offers.
- The lender registers the loan with ISED within the program's deadline after the first disbursement.
When a CSBFP loan makes sense, and when not
Good fit: a viable business that lacks the security or history for a conventional loan, a start-up buying equipment, or a franchisee fitting out leased premises.
Less useful: a business that can already get a conventional loan at a similar spread, since the 2% fee is an extra cost; buying shares of a company (not eligible); and very small working capital needs better met with a line of credit.
Frequently asked questions
Does the government guarantee my loan?
No. The guarantee protects the lender, not you. If you default, the lender pursues you and any guarantors as with any loan, and then claims part of its loss from the program.
Can I get a CSBFP loan for a business purchase?
Assets of a business being bought can be financed (at the lesser of cost or appraised value), but buying shares is not eligible.
Can I use it with other financing?
Yes. A CSBFP loan can sit alongside conventional loans, BDC financing or provincial programs, within the program's per-borrower limit.
Who do I complain to about a CSBFP loan?
The lender's complaint process first, then the external complaints body for that lender, such as OBSI for banks. See the complaints guide.
Sources
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program, eligibility, limits, finance map of lenders
- Justice Laws Website — Canada Small Business Financing Act and Regulations
- Farm Credit Canada — financing for farming businesses, which the CSBFP excludes
- BDC — an alternative or complement to a CSBFP loan
