Can Export Development Canada finance the purchase of a business?

Export Development Canada, or EDC, is a Crown corporation, but its stated mandate is narrower than lending to any small business for any purpose. EDC describes itself as Canada’s export credit agency and says the Export Development Act establishes its mandate: to support and develop Canada’s export trade and Canadian capacity to engage in that trade, and to respond to international business opportunities.

What EDC’s products are built for

EDC presents its solutions as insurance, guarantees and loans. The loan products it lists include export financing loans, loans for global expansion and buyer financing for international customers. Whether any would fit a purchase of a business whose customers are in Canada is a question for EDC, so ask it directly rather than assuming either way, especially if the target sells abroad.

Where acquisition financing does come from

The Canada Small Business Financing Program shares risk with lenders on loans to small businesses. Its guidelines list goodwill that is part of a going-concern purchase among the intangible assets a term loan can finance, and set out how lenders judge whether a sale covers substantially all of a going concern’s assets. BDC offers a business purchase or transfer loan and says a financing structure may combine the buyer’s own investment, a business loan and seller financing.

What to ask before spending time on EDC

Start with what the money would pay for and where the customers are. If the answer is the acquisition itself, the lenders above are where to begin; see how much money you need to buy a business. If the business has export sales or plans for them, the buyer can ask EDC separately about export-related support, alongside the acquisition lender.