What’s So Smart About Government SBL Small Business Loans

OVERVIEW – Information on SBL loans in Canada . Why is the Canada small business financing program loan ‘ smart’ financing for many business owners and entrepreneurs

Is the Canada Small Business Financing Program a smart way to finance your business? We think it is, if you understand what it is… and what it isn’t! Let’s dig in.

The SBL govt loan program in Canada is in some way a ‘ preferred’ program when it comes to the SME sector. While some SME businesses in Canada can in fact be a fair size we would quickly point out that our first fact here is simply that the program is geared toward businesses that have actual or projected revenues under the 5 Million $ threshold .

It’s a customized program that provides financing for a small handful of asset categories; those include equipment, leasehold improvements, technology equipment and application software, and even real estate. The typical mis-interpretation of the program is that it’s a cash loan, a working capital loan, or a revolving line of credit. The answer is a categorical ‘ NO IT IS NOT ‘ to all 3 of those!

How does the program work? It could not be simpler. The SBL loan funds 90% of anything you buy in the approved asset categories, which of course mean that your ‘ down payment’ or a better term ‘ equity component’ is a minimum of 10 per cent. Careful attention in your business plan and financial projections needs to be made around ensuring your working capital and debt to equity ratios are considered reasonable.

While many business owners wish funds could be used for working capital and cash flow needs that simply is not the case. So if you’re ‘ smart’ on SBL loans you’ll take some time to know what it covers relative to what can be financed.

Terms typically sought by our clients tend to be in the 5-7year range.

In the U.S. many institutions partner with the government on their version of this loan program. That isn’t the case here in Canada – the main partner is your local chartered bank. Your application and approval process will in fact be much quicker, and smoother when you’ve found a banker or Canadian business financing advisor that understands the program and knows how to ‘ fast track’ you toward approval .

There are a couple other key advantages of the program – they include the pricing, which is very favorable relative to overall credit risk in the SME sector ( that includes start ups also by the way ) and is currently in the 3% over prime these days. With rates currently so low that’s a solid cost of funds.

Many franchises in Canada are well suited to the SBL govt loan program. We suspect it wasn’t intended for that, it’s simply turned out to be the case. Banks won’t finance 95% of all franchises directly, but are happy to do so under the auspices of the Govt Canada Small business financing program.

‘Will I have to guarantee the loan personally? ‘Is a key question asked by clients we meet in the SBL process? The answer is… partially, as only 25% of the loan will be under your personal covenant.

There are many myths around SBL loans:

Myth # 1– Do I have to work with or meet or present to the government
Answer – NO

Myth #2 – Is the process complicated
Answer – It will absolutely be complicated if you’re not prepared. However if you have a business plan, reasonable personal credit history, a list of assets you need financed, and some other minor documentation you’re off to the races !

So are SBL loans ‘ smart financing’. In the right circumstances, absolutely. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you navigate

Govt loan waters!


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