A New Way To Buy An Existing Business In Canada ? Government Small Business Loan

OVERVIEW – Information on successfully using the SBL government small business loan to finance a business acquisition purchase in Canada

Use a Government small business loan , aka, the ‘ SBL’ to finance a business acquisition purchase in Canada? Absolutely, and by the way this is not something new, simply a tried and true way to purchase a business in Canada, including franchises. Let’s dig in.

Small is always relative (we’ve found), so we’re talking about purchasing a business with revenues under 5 Million dollars annual sales.

Why would an entrepreneur, or existing business owner purchase a business as opposed to starting one organically? One reason is pretty simple – risk is often minimized significantly if (and it’s a big ‘ if ‘) the proper research, due diligence and financing is undertaken.

Pricing the cost of the acquisition :

There are, of course, some intangibles that come into your overall business acquisition decision – they include areas such as management depth and experience of owners, industry conditions, etc.

But at the end of the day a financing challenge always looms, and the Canadian Government Small Business Loan, via Industry Canada’s program underwrites many thousands of business purchases every year. Those businesses also can include existing franchises in the booming Canadian franchise industry.

Business terms, rates and structures under the program are both attractive, and competitive. They include rates in the single digits, nominal personal guarantees, repayment without penalty, and long amortizations if in fact a longer repayment term is required.

Valuation is key in determining a financing structure that makes sense for the capital structure of the business. That capital structure is basically two components – debt and ownership equity. Purchasers should well be advised to consider a business financing advisor to help on valuation – as key issues around return on investment, cash flow, and asset appraisal are key to a solid and successful financing.

It’s important to note that valuable business advice from you lawyer, accountant, or business broker can provide potentially valuable assistance.

When utilizing the SBL loan in the acquisition finance purchase decision it’s critical to know what the program in fact does not finance. Those seeking financing for intangibles such as franchise fees, advertising, etc will be disappointed – the program only finances two categories of assets – equipment and leaseholds. By the way, the programs maxes out at 350k, but other sources of financing can often complement a total finance solution approach.

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success if you’re focused on a success business purchase financing experience.

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


7 Park Avenue Financial
Canadian Business Financing