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The program more Canadian entrepreneurs should know about

By ATB Financial 26 July 2019 3 min read

One of the most helpful programs available to entrepreneurs in Alberta is surprisingly obscure. That’s why many entrepreneurs don’t know about the Canada Small Business Financing Program (CSBFP).

The CSBFP can be a great choice for financing your entrepreneurial dreams. Here are the most common questions about the program, asked and answered by your friends at ATB’s Entrepreneur Centres.

 

What is the CSBFP?

The CSBFP is designed to help small entrepreneurs access financing. Established over 40 years ago by the federal government, the program shares risk between lenders like ATB and the government.

That shared risk means entrepreneurs may have an easier time obtaining financing.

ATB underwrites a majority of the CSBFP loans in Alberta, accounting for 10% of the national market.

 

What’s unique about it?

The government guarantees 85 per cent of each loan provided through the program. This makes it easier for entrepreneurs to access financing, whether they’re just getting started or looking to expand an established business.

The CSBFP offers other important benefits too. It can provide up to 100 per cent financing for your business, and the repayment periods for loans issued through the program are longer than many conventional financing options.

 

Who can apply for funding?

The program is open to any business that operates in Canada and holds its assets here with annual revenue under $10 million. Corporations, partnerships and sole proprietorships are all eligible.

There are a few excluded groups, though: non-profits, religious organizations, holding companies and trust companies are ineligible. Farms are also ineligible for this program, with the exception of fish farms.

 

What can be financed through the program?

Three broad categories of purchases are eligible.

  • Equipment—stuff your business needs to operate. Examples include machinery, furniture, motor vehicles and digital assets like computer software, website development and app development.
  • Leasehold improvements—this covers stuff like paint, lights, signs and construction costs for upgrading or changing property your business leases.
  • Real property, aka real estate, is the final category. Buying property, renovating property you already own and constructing a new building are all examples.

 

How much can I borrow?

For equipment and leasehold improvements, the maximum amount is $350,000. If you’re financing real property expenditures, the maximum is $1,000,000. You can borrow for more than one category, but the combined value of the loans can’t exceed $1,000,000. All the assets financed need to be used for the operation of your business.

 

What will the interest rate be?

You can choose between a floating or fixed interest rate. The average floating rate is Prime plus 3 per cent. The fixed rate is ATB’s closed fixed mortgage rate plus 3 per cent.

For more on our rates, check out our interest rates overview. Got more questions? Find your nearest branch or get in touch with us online. We’re here to listen and to help.

 

What are the application fees?

The federal government charges a non-refundable registration fee equal to 2 per cent of the desired loan. (This fee can also be financed.) The lender charges an application fee between 0.5–1 per cent, which needs to be paid out of pocket. ATB’s application fee is 0.5 per cent.

There also are a few other costs you’ll likely incur while applying, like legal fees and, if applicable, appraisal fees.

It’s important to note that starting a business usually comes other costs—franchising fees, building and development permits, advertising, office supplies and licenses and so on. These kind of fees are not covered by the CSBFP.

It’s really important to be clear-eyed about the amount of money you need to start or grow your business. To help entrepreneurs navigate through the steps of starting a new business in Alberta (including financing all aspects of a business), we created the Entrepreneur’s Guide to Starting a Business.

 

How can I apply?

Applying for a CSBFP loan is very similar to applying for other forms of financing at ATB. For more on putting together a strong application, check out this handy article.​​​

 
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If you have questions or need hands-on guidance, we’d love to help you put your best foot forward. Contact our Senior Managers of Entrepreneurship Anthony Bellot and Shenneile Henry. We’ll be in touch.

Need help?

Our Client Care team will be happy to assist.