Government Small Business Loans

By: EconomyWatch Content   Date: 17 December 2009

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The Canada Government Small Business Loans program is administered by the Business Development Bank of Canada (BDC), which is wholly owned by the Canadian government. The BDC plays a vital role in providing financial and consulting advisories to various small businesses and their debt obligations are underwritten by the Canadian government. To maximize your chances of getting a loan from a government institution, make sure of the following factors:

·        A well-thought business plan that thoroughly explains your business and strategies.

·        A worksheet of the estimated project cost.

·        A detailed management bio.

·        Financial statements of the key decision makers.

·        Detailed cash flow projections.

·        Details of business debts.

·        A list of collateral.

In addition, you need to have a good credit score to fulfill a bank’s requirements. Ideally, if you are a start-up, you need to have a score of 700 or more, and if you have an established business, you need to have a score of 650 or more.

Government Small Business Loans: Canadian programs

The Canadian Government Small Business Financing Program (CSBF) aims at increasing the availability of loans and capital assistance for establishing and expanding small businesses. Under the program, a Canadian small business can apply for a loan to a financial institution, such as banks, credit unions or Caisse Populaire (a cooperative, member-owned financial institution) or any leasing company of your choice. If your application is approved, the Government will guarantee 85% of your lender's losses in the event of default.

Most small businesses starting or operating in Canada are eligible for the CSBF program, as long as their estimated gross revenues do not exceed $5 million during the fiscal year in which they apply. Partnerships and incorporated companies qualify for this program. Charitable, not for profit, or religious organizations are not eligible for CSBF.

Microcredit funds are designed for small businesses that do not have access to bank credit. These funds are managed by local economic development centers. These funds predominantly support community projects that promote employment for women, immigrants, etc.

There are also a number of small business loan programs administered by the provincial networks of the regional economic development centers in Canada. These programs support start ups, and are not guaranteed by the BDC.


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