Canadian Small Business Financing Act

The Canada Small Business Financing Program seeks to increase the availability of loans for establishing, expanding, modernizing and improving small businesses. Under the program, a small business must apply for a loan at a financial institution (bank or credit union) of its choice. If the loan is granted by the financial institution, the federal government will reimburse 85 percent of the lender’s losses in the event of default. Up to $500,000 financing for any one business, of which no more than $350,000 can be used for purchasing leasehold improvements or improving leased property and purchasing or improving new or used equipment.

While Industry Canada is responsible for the administration of the Program, financial institutions are responsible for all credit decisions and for making the loans.

Computer software developmental costs are eligible if:

  • the software is for operational purposes of the business and not for marketing or promotional purposes;
  • the software is designed and developed by a specialized contractor/vendor;
  • the contract provides the details for the software specifications;
  • the contract is completed and the software is operational within one year from executing the contract;
  • it results in the borrower acquiring ownership of the computer software, and;
  • it excludes any payment for operating cost, ongoing maintenance and services.

For Additional Information: New in Canada’s Economic Action Plan

The real benefit of this federal loan mechanism is that you do not require the standard 25-30% downpayment from the financial institutes for the acquisition of a building. Please contact me for additional info.

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