Your Personal Guide To Government Business Loans In Canada

OVERVIEW – Information on government business loans in Canada. Who runs this program and what does the Canadian business owner /entrepreneur need to know about the ‘SBL ‘ Loan


Government Business Loans in Canada don’t really come with a guide and roadmap; and yes we do think the program is a ‘ big deal’

when it comes to business financing in the Canadian marketplace. Let’s dig in.

Industry Canada

is an agency of the Canadian federal government which is charged with administering the Small business loan program in Canada. The program provides financial assistance, via a loan guarantee to your bank. It’s a solid program for start up and small businesses – and the program actually defines ‘ small ‘ as those firms with real or projected revenues of less than 5 Million $.

One of the true revelations to many client we speak to about the program is that the governments only role is as the guarantor of the loan – institutions such as our Chartered banks run the program on a day to day basis . That’s good news and some bad news

as we’ll reveal later here.

Guidelines for ‘ SBL ‘(that’s the common acronym for the loan) loans are pretty clear. The program financing limit is $350,000.00 and finances only two asset categories – equipment and leaseholds.

Rates of the program are very attractive given that the credit profile of the borrower is such that traditional bank financing cannot be achieved. (Actual rates of the program are 3% over the current prime rate)

Borrowers are responsible to guarantee 25% of the loan personally; given that many forms of Canadian business financing require a 100% owner guarantee or outside collateral this is clearly a very attractive component of the SBL loan. Again, to be clear here, the bank grants and administers the loan, the government is the guarantor for the bank.

Previously we noted that there is some ‘bad news’ around Canadian chartered banks administering the program. In our experience many bankers are either unfamiliar with the program, and if they are they view the transaction as a ‘make work’ project. Our recommendation? Find a banker or business financing advisor that can fast track the program with a knowledgeable banker. Problem solved!

Many clients we meet initially have a strong perception that the application process for government business loans in Canada is cumbersome. Everyone has an opinion, but we strongly feel that’s not the case. The only key components of the loan application are a personal net worth statement , a business plan or executive summary, a premises lease for your business location, and a list of items you wish to finance that reference the cost, mfr/supplier, etc. Surely that can’t be construed as cumbersome!

By the way, it’s important that your business plan/exec. Summary include a good cash flow statement that shows how the loan is going to be repaid. Also, business people should understand that it is highly desirable to have some relevant business experience within the industry that you are in. Start ups take note!

Typical loan terms for the government loan are 5-7 years – Any shorter term than that is also appropriate. The government charges a one time 2% fee for the loan and we would add that this is often simply built into the overall financing/monthly payment. When properly structured there are no prepayment issues, which is another attractive part of the program; Many other types of business loans and leases penalize the borrower for repaying early. The SBL program does not do that.

When you recap the overall benefits of the SBL loan it’s clear you might now agree with us that the program is in fact a ‘ big deal ‘. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can be your personal guide to Government business loans in Canada.

Author: Stan Prokop – founder of 7 Park Avenue Financial

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of 90 Million $$ of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:


Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171