The Canada Small Business Financing Program (CSBFP): how it works when you buy a business

The CSBFP is a federal program in which the government shares the risk with your bank. That makes banks more willing to lend to small businesses, including first-time buyers. It is a loan, not a grant, and you apply through your own bank or credit union, not through the government.

The limits

• Up to $1.15 million in total per business.
• Term loans up to $1,000,000, of which up to $500,000 can go to equipment, leasehold improvements and eligible intangible assets.
• Working capital line of credit up to $150,000.
• Real property, meaning the building itself, can be financed within the $1M term limit.

Who qualifies

• A for-profit small business in Canada with gross revenue of $10 million or less.
• New businesses and businesses being bought both qualify. There is no minimum time in business.
• Not eligible: farming and residential rental properties. Goodwill on its own is not eligible.

What it costs

• A 2% registration fee, which can be added to the loan.
• Interest capped at prime + 3% (variable) or the lender's mortgage rate + 3% (fixed). That cap includes a 1.25% annual administration fee.
• Terms up to 10 years for equipment and leaseholds, and up to 15 years for real property.
• A personal guarantee is usually required. Ask your lender how much of the loan it covers.

How it fits a business purchase

When you buy a business, the price is usually split into hard assets (equipment, fixtures, leaseholds, sometimes the building) and goodwill (the name, customers and cash flow). The CSBFP can finance the hard-asset part. The goodwill part is usually covered by your down payment, a BDC loan, or vendor financing. A common structure looks like this:

• Down payment: about 20–30%
• CSBFP: equipment, leaseholds and working capital line
• BDC or vendor take-back: the rest, including goodwill

What to bring to the bank

• Signed offer or letter of intent, with an equipment and asset list
• 3 years of the business's financial statements
• Your Notices of Assessment, credit report and net worth statement
• A business plan with 12–18 month cash flow projections
• The lease, or the landlord's consent to assignment

Approval typically takes a few weeks once the file is complete, so build that into your offer conditions.

Program rules change. Confirm current limits and fees with your lender or the Government of Canada's CSBFP page before you sign. This is general information, not lending advice.

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