The Canada Small Business Financing program is designed to encourage financial institutions to make loans they might otherwise feel are too risky, by providing a government guarantee. If there is a default, Ottawa picks up 85 per cent of the loan loss.
How it works:
WHO? Any for-profit business with gross annual revenue of up to $5-million is eligible.
HOW MUCH? Any one business can get up to $500,000 (this was raised from $250,000 a couple of years ago).
WHERE? The loans are made by financial institutions, and they decide whether to lend the money. They then register the loan with Industry Canada.
WHAT? The money can be used to buy assets such as land, equipment, vehicles and software. It can't be used for working capital, goodwill, inventories, franchise fees or R&D.
COSTS? The interest rate is determined by the financial institution.
FEES? A 2-per-cent registration fee is paid by the borrower to the lender, and is passed on to Industry Canada along with a portion of the interest. There is also an annual administration fee of 1.25 per cent.
2009-2010 CSBF figures:
Number of loans: 7,441
Loans over $250,000: 847
Total loans: $956-million
Average loan: $128,561
Main sectors: Accommodation and food services (29 per cent); retail trade (16 per cent); transportation and warehousing (7 per cent); manufacturing (6 per cent).
Default claims: 1,968
Total defaults: $113-million