CSBFP eligible costs

A buyer using the Canada Small Business Financing Program (CSBFP) to buy a business meets this list, because the program guidelines calculate the eligible loan amount for each class of asset. Section 5 of the Canada Small Business Financing Regulations lists the classes a loan must fall within, and the guidelines explain them.

The categories

• The purchase or improvement of real property, if necessary for operating the borrower’s small business, subject to the conditions in subsection 5(2) on how the property is used.
• The purchase of leasehold improvements, or improvement of leased premises, if necessary for operating the business, subject to subsection 5(4) on subleasing.
• The purchase or improvement of equipment necessary for operating the business.
• Intangible assets and working capital costs. The guidelines include goodwill if it is part of a going concern purchase.
• Lines of credit for working capital costs, and loans to pay the registration fees on a loan in the other classes.

What is not eligible

The guidelines say a loan to acquire shares is advanced to a shareholder, not to a small business financing eligible assets, so the acquisition of shares is not eligible. Section 5 also excludes labour by the borrower or its employees from the cost of real property, leasehold and equipment loans, though a subcontractor’s labour may be included, and bars loans in the first four classes from paying refundable taxes. The guidelines also say a going concern is a business that has carried on operations at any time within 60 days before the purchase, or during the prior season if seasonal. See whether the CSBFP covers buying a business and the registration fee.