The Canada Small Business Financing Program (CSBFP) is a loan loss-sharing program that partners with private sector lenders to increase the availability of financing to small businesses. Under the program, small businesses can access loans of up to $1 million to purchase or improve real property, leasehold improvements and equipment. To be eligible, borrowers must be for-profit businesses with annual revenues of $10 million or less. The CSBFP is a national program that operates through a network of financial institutions in all provinces and territories.
The role of Federal Government
Innovation, Science and Economic Development (ISED) Canada is responsible for the design and administration of the CSBFP. It reviews and evaluates the legislative and regulatory frameworks and recommends improvements on a periodic basis. It also administers the program by registering loans, collecting fees and paying lenders eligible portions of losses on defaulted loans. ISED, however, is not involved in the disbursement and administration of the loans.
The role of lenders
Private sector lenders are responsible for making all credit decisions, approving and disbursing the loans, registering the loans with the CSBFP and administering the loans. Each lender has its own lending criteria subject to the requirements of the CSBFP. Once the loan is approved, the borrower receives the funds from the lender, not the government. If a loan is in default, the lender must recover all assets taken as collateral, before submitting the claim for loss to the CSBFP. Once the lender's information is reviewed and the claim is approved, the lender is paid 85 percent of the net eligible loss.
Lenders registered $1.2 billion in small business loans
- 5,901 loans were made to Canadian small businesses valued at $1.2 billion;
- Compared to the previous year, the number of loans increased by 609 loans (12 percent), while the value of loans increased by $228.7 million (23 percent);
- The average loan size was $205,873, which represents an increase of 10.5 percent from 2016–17.
Even though there was a big increase in lending, CSBFP paid claims of only $50.2 million
- The CSBFP paid a total of 792 claims to lenders representing $50.2 million. These claims were associated to loans that could have been made any time in the previous 10 years;
- The number and value of claims paid decreased by 19.7 percent and 18.2 percent respectively compared to the previous year;
- The average claim size was $63,340.
Start-ups and new businesses received the largest share of financing
- Start-ups and businesses operating less than one year continued to receive the majority of loans, which accounted for $765.5 million (63 percent).
Equipment and leasehold improvements were the most common assets financed
- Leasehold improvements and equipment loans represented $513.9 million (42.3 percent) and $379.5 million (31.2 percent) in lending respectively;
- Real property accounted for $321.5 million (26.5 percent);
- Over the last three years, the total value of loans for real property increased by 98.4 percent due to the increase to the maximum loan amount in 2015-16;
- Lending for leasehold improvements increased by 75.8 percent since 2014-15, while lending for equipment increased by 10.4 percent.
Lending was accessible in every province and territory
- Ontario and Quebec: the largest share of loans registered with 3,582 loans (60.7 percent) totalling $760.4 million (62.6 percent);
- Western Canada: 1,954 loans (33.1 percent) totalling $392.2 million (32.3 percent); and
- Atlantic Canada: 366 loans (6.2 percent) totalling $62.1 million (5.1 percent).
Figure 1: Value of CSBF Loans by Province and Territory, 2017-18
Accommodation and food services and retail trade were the main industry sectors using the program
- Accommodation and food services was the largest industry sector using the CSBFP at $493.4 million, representing 40.6 percent of the total value of loans made;
- Retail trade sector followed in second at 12.3 percent; and
- Transportation and warehousing at 4.8 percent and Arts, entertainment and recreation at 4.5 percent rounded up the top four sectors.
The CSBFP website is a popular channel for small business information
The CSBFP website continued to be one of the Department's most popular sites, with 191,242 visits. In addition, more than 1,706 telephone and 268 email inquiries were received from small businesses and lenders through the program's info line and website and over 48,700 information pamphlets were distributed.
For more information on the administration and financing activities of the CSBFP since 1999, visit the CSBFP website or the Government of Canada's OPEN DATA PORTAL.