CSBFP eligible business (gross annual revenue limit)

A buyer applying for a Canada Small Business Financing Program (CSBFP) loan must first show that the business qualifies. Section 2 of the Canada Small Business Financing Act defines a small business by its estimated gross annual revenue, measured for the fiscal year in which the lender approves the loan.

The revenue test

The ceiling is set in the Act, or a lesser amount may be prescribed, so read section 2 for the current figure. Under section 2, for a business about to be carried on, the test is the revenue expected, when the loan is approved, for its first fiscal year of not less than 52 weeks duration. The Act speaks of estimated revenue at approval, so ask the lender how it will estimate it for the business being bought.

What else the guidelines exclude

• Businesses engaged in farming. Section 2 of the Act itself excludes the business of farming, and the guidelines define farming by reference to Statistics Canada’s Standard Industrial Classification, 1980.
• A holding corporation, because it does not operate a business.
• An individual or corporation buying real property for the sole purpose of rental.

See whether the CSBFP covers buying a business and what the loan can fund.