Which lenders offer Canada Small Business Financing Program loans?

The Canada Small Business Financing Program (CSBFP) does not lend money itself. Innovation, Science and Economic Development Canada (ISED) describes it as making it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. So the loan comes from a lender, and the Act says the loan must be made by and with the consent of a lender. This answer covers who counts as a lender and how to find one.

Who counts as a lender under the Act

The Canada Small Business Financing Act defines “lender” in three parts. The first is a member of the Canadian Payments Association. The second is a local cooperative credit society that is a member of a central cooperative credit society, if that central society is a member of the Canadian Payments Association. The third is any other organization the Minister designates as a lender for the purposes of the Act. The Act does not list institutions by name, so confirm with a lender that it offers CSBFP loans rather than assuming it does.

How to find a lender

ISED’s page on finding a loan tells small businesses to present their business plan directly to any bank, credit union or caisse populaire. The same page links to a “Find a lender near you” tool, and the program’s home page also says to contact a lender near you for more information. Use the tool to see who is listed where you operate, then ask each lender directly whether it offers CSBFP loans for what you need.

The lender is the one you borrow from

A CSBFP loan is not a government loan. Under section 5 of the Act, and subject to the limits it sets, the Minister is liable to pay a lender an eligible loss, calculated under the regulations, on a loan for which the requirements of the Act and regulations were met. The borrowing relationship stays with the lender. The program’s guidelines say lenders are expected to apply the same due diligence they would apply to a conventional term loan or line of credit for the same amount. They add that the lender must also perform the tasks in paragraphs 8(a) and (b) of the CSBF Regulations: conducting a credit check or obtaining credit references on the borrower and/or anyone legally or financially responsible for the borrower, and completing an assessment of the repayment ability of the borrower. So be ready to answer the lender’s questions about your business and your plan.

What to ask a lender

• Does this institution make CSBFP loans, and does it offer one for the purpose you have in mind?
• Which fees would you pay, and what is each for? Ask for them in writing.
• What security or guarantees would it want, and what would each put at risk for you?
• What happens if this branch does not offer the program: can it point you to another lender?