BDC (Business Development Bank of Canada)
The Business Development Bank of Canada is a federal Crown corporation that lends directly to Canadian businesses. Unlike the CSBFP — a loss-sharing program delivered through private lenders — BDC is itself the lender, and it finances acquisitions including the goodwill portion that banks often will not.
BDC matters in acquisition financing because of what it is willing to lend against. Conventional lenders prefer identifiable assets they could resell; a business whose value sits largely in customer relationships and reputation is harder for them to underwrite. BDC operates with a mandate to support Canadian entrepreneurship, which changes what it will consider.
How it is commonly used
- Alongside a bank, with each lender taking a different slice of the assets
- To finance goodwill where a conventional lender has capped its advance
- For longer amortisation than a bank will offer, which improves debt service coverage
- For working capital alongside the acquisition itself
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaIndustryHow to sell your business
- 02Innovation, Science and Economic Development CanadaGovernmentCanada Small Business Financing Program
- 03Treadstone LawLegal commentaryBDC Financing for Buying a Business in Ontario
- 04Treadstone LawLegal commentaryFinancing Options for First-Time Business Buyers in Ontario
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