Canada Small Business Financing Program (CSBFP) in 2026: Limits, Rates, Fees and How to Apply

The Canada Small Business Financing Program (CSBFP) is the federal government's main loan program for small businesses, yet you never deal with the government to use it. You borrow from your own bank or credit union; Ottawa promises to cover most of the lender's loss if the loan goes bad, which makes lenders willing to say yes to businesses they'd otherwise turn down. This guide explains who qualifies in 2026, how much you can borrow and for what, the interest rate caps and fees, and how to apply — with a worked example in Canadian dollars and a comparison with BDC and Futurpreneur loans.

Quick answer

The CSBFP lets small businesses with gross revenue of C$10 million or less borrow up to C$1.15 million from a participating bank, credit union or caisse populaire, with the government sharing the lender's risk. You apply at the lender, not the government.

• Term loans up to C$1 million for real property, equipment, leasehold improvements, intangible assets and working capital

• A line of credit up to C$150,000 for working capital

• Rate caps: prime + 3% (floating term loans), prime + 5% (lines of credit)

• One-time registration fee of 2%, which you can finance

• Terms up to 15 years for term loans and 5 years for lines of credit

How the CSBFP actually works

The program runs under the Canada Small Business Financing Act and is administered by Innovation, Science and Economic Development Canada (ISED). It's a loan guarantee, not a grant and not a government loan. The money comes from the lender, which makes the credit decision, sets the rate within the program's caps, disburses the funds and collects your payments. Within six months of making the loan, the lender registers it with ISED and pays the registration fee.

If the business defaults and the lender has realised whatever security it holds, the government reimburses 85% of the lender's net eligible loss. That's the whole trick: the lender is exposed to only a slice of the loss, so it can lend to start-ups, businesses with thin collateral, or borrowers who need more than a conventional loan would give them.

The program is used heavily. In the 2024-25 fiscal year, lenders registered 6,409 loans worth about C$1.9 billion, with an average loan of roughly C$294,000, according to ISED's annual overview. The line of credit product introduced in 2022 is still small but growing, with 373 lines issued that year.

Because the lender owns the decision, two businesses with the same plan can get different answers from different banks. If your main bank isn't keen, ask another participating lender; credit unions and caisses are often active CSBFP lenders in their regions.

Who does what in a CSBFP loan

Step 1

You apply to a bank or credit union

Step 2

Lender approves and sets the rate

Step 3

Lender registers the loan with ISED

within 6 months; 2% fee

Step 4

You repay the lender

Step 5

If you default

ISED covers 85% of the net loss

Who is eligible for a CSBFP loan

A business qualifies if it operates in Canada and has gross annual revenue of C$10 million or less. That covers:

• Start-ups, including businesses that haven't opened yet;
• Existing businesses of any age under the revenue limit;
• For-profit businesses, not-for-profits and charities that run a business;
• Sole proprietorships, partnerships, corporations and co-operatives.

Farming businesses are excluded. They have their own federal guarantee program under the Canadian Agricultural Loans Act, which works in a similar way through the same lenders.

Eligibility only means the loan can be registered under the program. The lender still applies its normal credit standards: your personal credit history, the business plan, how much you're investing yourself, cash flow to cover payments, and the value of the assets being financed. The guarantee reduces the lender's risk but doesn't remove it — the lender still carries the rest of any loss and the cost of collecting.

Loan limits after the 2022 changes

The biggest overhaul in years took effect on 4 July 2022. It raised the overall limit, added a line of credit, and opened the program to intangible assets and working capital. Many lender and blog pages still quote the old figures, so check that any page you rely on reflects these.

CSBFP limits before and after 4 July 2022

	Before July 2022	Since 4 July 2022
Overall limit per borrower	C$1 million	C$1.15 million
Term loans	Up to C$1 million (real property)	Up to C$1 million
Equipment and leasehold improvements	C$350,000	C$500,000 (within term loans)
Intangible assets and working capital	Not eligible	C$150,000 (within the C$500,000)
Line of credit	Not offered	C$150,000 for working capital
Maximum term	Varied by asset type	15 years for all term loans; 5 years for lines of credit

Overall limit per borrower

Before July 2022

C$1 million

Since 4 July 2022

C$1.15 million

Term loans

Before July 2022

Up to C$1 million (real property)

Since 4 July 2022

Up to C$1 million

Equipment and leasehold improvements

Before July 2022

C$350,000

Since 4 July 2022

C$500,000 (within term loans)

Intangible assets and working capital

Before July 2022

Not eligible

Since 4 July 2022

C$150,000 (within the C$500,000)

Line of credit

Before July 2022

Not offered

Since 4 July 2022

C$150,000 for working capital

Maximum term

Before July 2022

Varied by asset type

Since 4 July 2022

15 years for all term loans; 5 years for lines of credit

The caps nest inside each other, which confuses people. Think of it as three layers:

1. C$1.15 million in total, including any loans to associated businesses.
2. Of that, C$1 million can be term loans, and C$150,000 can be a line of credit.
3. Of the term loans, no more than C$500,000 can be for equipment and leasehold improvements, and within that C$500,000, no more than C$150,000 can be for intangible assets and working capital.

So a business buying a building can use the full C$1 million for the property. A business that rents its premises and needs equipment, a fit-out and some start-up costs tops out at C$500,000 in term loans plus a C$150,000 line of credit.

What you can finance — and what you can't

Real property. Buying, building, renovating or improving land and buildings used by the business. This is the only category that can use the full C$1 million term-loan limit. The lender takes security on the property.

Leasehold improvements. Renovating premises you lease: a restaurant fit-out, a clinic build-out, retail shelving and flooring. The lender takes security on business assets, since it can't take the landlord's building.

Equipment. New or used equipment, including vehicles used in the business, kitchen equipment, production machinery and computers. Security is taken on the equipment financed.

Intangible assets. Since 2022, things without physical substance that can be sold, transferred or licensed: franchise fees, software, permits and licences, capitalised research and development, and goodwill bought as part of acquiring a business's assets.

Working capital. Day-to-day operating costs such as rent, wages, inventory and marketing. Through a term loan it's limited to C$150,000 together with intangible assets, and a separate line of credit of up to C$150,000 is for working capital only.

Not eligible: buying shares in a company, assets acquired by a holding company, and farming businesses. If you're buying an existing business, the deal usually needs to be structured as an asset purchase for the CSBFP to apply; talk to your lender and accountant before you sign anything.

Interest rates, fees and terms

The lender chooses your rate, but the regulations cap it:

Prime rates follow the Bank of Canada's policy rate, which was held at 2.25% on 2 September 2026. Ask each lender for its current prime and the margin it's offering you; the cap is a ceiling, not a target, and a strong application can come in below it.

Registration fee. You pay a one-time fee of 2% of the loan amount (or of the authorized amount of a line of credit). The lender collects it and remits it to ISED. It can be financed as part of the loan, which is what most borrowers do.

Administration fee. The lender pays ISED an annual fee of 1.25% on the outstanding balance. It isn't billed to you directly, but it is part of the lender's cost of offering a CSBFP loan, which is one reason the rate on a guaranteed loan can be higher than on a conventional secured loan to an established business.

Lender fees. Banks may also charge their own application, legal or appraisal costs, especially on real property loans. Ask for a written list before you commit.

CSBFP at a glance (2026)

C$1.15 million

Maximum per borrower

Term loans + line of credit

C$10 million

Revenue limit

Gross annual revenue

2%

Registration fee

One-time, can be financed

85%

Lender loss covered

Of net eligible loss

Worked example: a pizzeria in Mississauga

Marco is opening a pizzeria in a leased unit in Mississauga. His costs are C$180,000 for the kitchen fit-out (leasehold improvements), C$120,000 for ovens and equipment, and he wants a cushion for the first months of wages and inventory. He's putting in C$75,000 of his own money.

The term loan. Leasehold improvements and equipment total C$300,000, well inside the C$500,000 cap. The registration fee is 2% of C$300,000, or C$6,000, which he finances, so the loan is C$306,000.

The rate. Assume his bank's prime rate is 4.45% — check your lender's current posted prime, because it moves with the Bank of Canada. The maximum it can charge on a floating term loan is 4.45% + 3% = 7.45%. Over a 10-year term at that cap, the C$306,000 loan costs about C$3,624 a month, and roughly C$128,900 of interest over the life of the loan if the rate never changes. A bank that offers prime + 2% instead would save him real money, so he compares two lenders.

The line of credit. For wages and inventory he adds a C$150,000 line of credit. That carries a further 2% registration fee of C$3,000 on the authorized amount and a rate of up to prime + 5%, but he only pays interest on what he draws.

The total. Marco's CSBFP financing is C$456,000 including fees — inside the C$1.15 million limit. The bank takes security on the equipment and business assets and may ask for a personal guarantee. Run your own numbers through the EMI calculator.

Security and personal guarantees

Every CSBFP loan is secured. For real property and equipment, the lender takes security on the assets being financed. For leasehold improvements, intangible assets and working capital, it takes security on the business's assets more generally.

Personal guarantees are at the lender's discretion. According to ISED's guidance for lenders, any personal guarantee taken on a CSBFP loan must be unsecured and can't exceed the original amount of the loan. In plain terms, the bank can't register a mortgage on your house to back a guarantee of a CSBFP loan — though it can still pursue you personally under the guarantee if the business defaults. Read the guarantee carefully and ask the lender exactly how much of it they expect you to sign.

Buying a franchise or an existing business

Two of the most common reasons people look up the CSBFP are buying into a franchise and taking over a business from a retiring owner. Both can work, but the deal has to fit the program's categories.

Franchises. Since July 2022, the initial franchise fee counts as an intangible asset, so it can be financed within the C$150,000 sub-limit. The fit-out of the unit is a leasehold improvement and the kitchen or shop equipment is equipment, both inside the C$500,000 cap. Many franchisors have lenders they work with regularly and know the paperwork; ask the franchisor which banks have financed recent units under the program, then still compare offers.

Buying an existing business. The CSBFP can't finance the purchase of shares, so buying the corporation that owns a business won't qualify. An asset purchase — you buy the equipment, leasehold improvements, inventory and goodwill, often through a new company you've incorporated — can. Each piece then falls into its category: equipment and leasehold improvements up to C$500,000, goodwill and other intangibles plus working capital within C$150,000, and the building, if it's included, as real property. Asset purchases have different tax consequences for the seller than share sales, so price negotiations often turn on this point. Bring your accountant in early, before you sign a letter of intent.

How to apply, step by step

Getting a CSBFP loan

1. 1

   Work out what you're financing

   List real property, leasehold improvements, equipment, intangible assets and working capital separately — each has its own cap.

2. 2

   Prepare your business plan and projections

   Lenders typically want a business plan, 12–24 months of cash-flow projections, quotes or invoices, and your personal financial statement.

3. 3

   Approach participating lenders

   Ask your bank, credit union or caisse populaire whether it lends under the Canada Small Business Financing Program. Apply at two or three.

4. 4

   Compare offers

   Compare the margin over prime, the term, lender fees and personal guarantee terms. The 2% registration fee is the same everywhere.

5. 5

   Sign and draw down

   The lender disburses against invoices and registers the loan with ISED within six months.

   ISED — find a CSBFP loan

What lenders look for. Expect questions on your experience in the industry, how much of your own money is going in, how the business will cover its payments in a slow month, and what happens if sales come in below plan. A start-up with no trading history leans heavily on the plan and the owner's personal credit. Most lenders want the borrower to have some money at stake; the program doesn't set a minimum, but lenders do.

Timing. Banks set their own timelines. Equipment and fit-out loans are usually drawn as invoices arrive, so the paperwork with suppliers matters as much as the approval.

Common reasons for a no. Weak personal credit, no owner investment, projections that don't hang together, or financing something the program doesn't cover, such as a share purchase. If one lender declines, ask why, fix what you can and try another — each lender makes its own call.

CSBFP vs BDC vs Futurpreneur

The CSBFP isn't the only federal-backed option. The Business Development Bank of Canada (BDC) is a federal Crown corporation that lends directly, and Futurpreneur is a national not-for-profit that lends to young founders with BDC alongside.

Federal-backed small business loans compared

	CSBFP	BDC Small Business Loan	Futurpreneur Core Startup
Who lends	Your bank or credit union	BDC directly, online	Futurpreneur + BDC
Maximum	C$1.15 million	C$350,000	C$75,000 (incl. up to C$50,000 from BDC)
Who qualifies	Revenue ≤ C$10 million; start-ups OK	24+ months operating, profitable	Founders aged 18–39; business up to 24 months old
Security	Assets financed / business assets	Set by BDC	Set by program
Extras	Line of credit up to C$150,000	Fast online approval	Two years of mentorship

Who lends

CSBFP

Your bank or credit union

BDC Small Business Loan

BDC directly, online

Futurpreneur Core Startup

Futurpreneur + BDC

Maximum

CSBFP

C$1.15 million

BDC Small Business Loan

C$350,000

Futurpreneur Core Startup

C$75,000 (incl. up to C$50,000 from BDC)

Who qualifies

CSBFP

Revenue ≤ C$10 million; start-ups OK

BDC Small Business Loan

24+ months operating, profitable

Futurpreneur Core Startup

Founders aged 18–39; business up to 24 months old

Security

CSBFP

Assets financed / business assets

BDC Small Business Loan

Set by BDC

Futurpreneur Core Startup

Set by program

Extras

CSBFP

Line of credit up to C$150,000

BDC Small Business Loan

Fast online approval

Futurpreneur Core Startup

Two years of mentorship

A new business usually starts with Futurpreneur (if the founder is under 40) or the CSBFP; an established, profitable business that needs a modest sum quickly may find BDC's online loan simpler. For non-repayable funding in Ontario, see our guide to Ontario small business grants — and remember most "grants" are smaller than people expect, while the CSBFP is where the larger sums are.

Mistakes to avoid

• Relying on old limits. Anything quoting a C$350,000 equipment cap or a C$1 million total is pre-2022.
• Applying to only one lender. Every lender decides independently; a no from one isn't a no from the program.
• Structuring a business purchase as a share deal. Share purchases aren't eligible. Plan an asset purchase if you need CSBFP financing.
• Overlooking the line of credit. Working capital in a term loan counts against the C$150,000 cap; a separate C$150,000 line can cover the rest.
• Treating the rate cap as the price. Ask lenders to beat it.
• Mixing it up with "free money". The CSBFP is a loan you repay in full with interest. Anyone selling access to a "CSBFP grant" is running a scam.

Official links

• ISED — Canada Small Business Financing ProgramProgram home
• ISED — Helping small businesses get loansLimits, rates, fees, eligibility
• ISED — FAQ for small businesses
• ISED — 2022 changes bulletin
• BDC — Small business loan
• Futurpreneur — Get started

What to do next

Write down what you're financing in the program's categories, check each against its cap, and build a cash-flow projection that shows the payments at the maximum rate — if it works at the cap, it works. Then book meetings with two or three participating lenders. If you haven't registered or incorporated yet, do that first: our guide to incorporating in Canada and business registration guide cover the steps, and lenders will ask for the paperwork. Check how much you can comfortably borrow with the loan eligibility calculator.

This is general information, not financial or legal advice — confirm on the official source or with a professional.

Frequently asked questions

How much can I borrow under the Canada Small Business Financing Program?

Up to C$1.15 million per borrower, including associated borrowers. That splits into up to C$1 million in term loans and up to C$150,000 in a line of credit. Within the term loans, no more than C$500,000 can go to equipment and leasehold improvements, and no more than C$150,000 of that to intangible assets and working capital.

What is the interest rate on a CSBFP loan?

The lender sets the rate, but the program caps it. A floating-rate term loan can't exceed the lender's prime rate plus 3%, a fixed-rate term loan can't exceed the lender's residential mortgage rate for the same term plus 3%, and a line of credit can't exceed prime plus 5%. Many borrowers are offered rates below the cap, so compare lenders.

Do I apply for a CSBFP loan through the government?

No. You apply at a bank, credit union or caisse populaire that takes part in the program. The lender assesses your application, decides whether to lend, disburses the money and registers the loan with Innovation, Science and Economic Development Canada. The government shares the lender's risk but never sees your application.

Can a start-up get a Canada Small Business Financing Program loan?

Yes. Start-ups are eligible as long as the business operates in Canada for profit or as a not-for-profit or charity, and has gross annual revenue of C$10 million or less. Lenders still need to be convinced you can repay, so a start-up needs a solid business plan, cash-flow projections, quotes for what you're buying and usually some owner investment.

What can't a CSBFP loan be used for?

You can't use it to buy shares in a business, to finance assets bought by a holding company, or for a farming business, which falls under the Canadian Agricultural Loans Act program instead. Working capital and intangible assets are allowed but limited to C$150,000 in term loans, plus a C$150,000 line of credit.

Is there a fee for a CSBFP loan?

Yes. A one-time registration fee of 2% of the loan amount, or of the authorized amount of a line of credit, is paid to the lender and passed to the government. You can finance the fee as part of the loan. The lender also pays a 1.25% annual administration fee to the government on the outstanding balance.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 8 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Helping small businesses get loans — Innovation, Science and Economic Development Canada · accessed 8 October 2026
2. 2.Frequently asked questions — For small businesses — Innovation, Science and Economic Development Canada · accessed 8 October 2026
3. 3.Bulletin: 2022 changes to the Canada Small Business Financing Program — Innovation, Science and Economic Development Canada · accessed 8 October 2026
4. 4.Frequently asked questions — For lenders — Innovation, Science and Economic Development Canada · accessed 8 October 2026
5. 5.Overview and Highlights 2024-25 — Innovation, Science and Economic Development Canada · accessed 8 October 2026
6. 6.Canada Small Business Financing Program — home — Innovation, Science and Economic Development Canada · accessed 8 October 2026
7. 7.Bank of Canada interest rate announcement, 2 September 2026 — Bank of Canada · accessed 8 October 2026
8. 8.Small business loan — Business Development Bank of Canada (federal Crown corporation) · accessed 8 October 2026
9. 9.Get started — Core Startup Program — Futurpreneur Canada · accessed 8 October 2026