How do I write the business plan for a CSBFP loan?

The Canada Small Business Financing Program is often described as a "government loan," which leads borrowers to assume the federal guarantee does the convincing for them. It does not. CSBFP loans are made by banks and credit unions; the government shares 85% of any loss but the lender still underwrites the file on its own credit criteria. This guide explains the program structure, then walks through exactly what the lender's underwriter wants in the plan — the use-of-funds schedule mapped to eligible cost classes, the projections that demonstrate repayment, and the equity and security narrative that gets a borderline file across the desk. (For choosing between CSBFP, BDC, and a conventional bank loan in the first place, see our separate comparison.)

Who actually decides a CSBFP loan — the government or the bank?

The bank. The CSBFP is a loss-sharing program, not a direct-lending program. The federal government's loss-sharing ratio is 85/15 — Ottawa covers 85% of an eligible loss and the lender absorbs the remaining 15%. ISED's program guidelines are explicit that each participating lender applies its own lending criteria subject to the program's rules.

That 15% exposure is why the underwriting step survives the guarantee. A bank approving a CSBFP file is still putting its own capital at risk and still answers to its own credit committee. The guarantee widens the lender's risk appetite at the margin — it can say yes to a thinner file than it would on a conventional loan — but the borrower still has to prove the three things every lender reads a plan for:

• Repayment capacity — modelled cash flow that services the loan
• Eligible, itemised use of funds — every dollar mapped to a program cost class
• A capable operator — the owner's experience tied to the specific business

The guarantee changes the odds. The plan still has to make the case.

How much can a CSBFP loan finance, and how is it split?

The maximum is $1.15 million per borrower, structured as two products:

Product	Maximum	Sublimit detail
Term loan	$1,000,000	Up to $500K for equipment + leasehold improvements combined; within that $500K, up to $150K for intangibles + working capital
Real property (within term)	Up to $1,000,000	Real property purchase/improvement can use the full $1M term ceiling
Line of credit	$150,000	Working capital costs only — over and above the term-loan working-capital allowance

The structure matters for the plan because the use-of-funds schedule has to respect these sublimits. A deal that puts $600,000 into equipment fails the $500K equipment-and-leasehold cap even though it sits under the $1M term ceiling. A plan that asks for $200,000 of intangibles breaches the $150K intangibles cap. The schedule should be built against the caps, not retrofitted to them after the lender flags the problem.

Eligibility gate: the business must operate in Canada with gross annual revenues of $10 million or less (estimated for the year of approval, or the first 52 weeks for a start-up). Farming businesses are excluded — they have a separate program (CALA).

What can the loan actually pay for — and what can't it?

This is the part most plans get wrong. The use-of-funds schedule must map every line to an eligible cost class, because the lender registers the loan against those classes and the program will not honour a claim on an ineligible expenditure.

Eligible — term loan:

• Purchase or improvement of real property used commercially
• Purchase of new or used equipment
• Purchase of new or existing leasehold improvements
• Intangible assets (franchise fees, goodwill tied to an asset purchase, permits and licences, capitalised R&D, software/website built by a specialised contractor) — added July 2022, capped at $150K
• Working capital costs — added July 2022, within the $150K intangibles-and-working-capital sublimit
• The 2% registration fee

Eligible — line of credit: working capital costs and the registration fee only.

Ineligible (do not put these in the schedule):

• The borrower's own labour (subcontractors are fine; the owner's time is not)
• Goodwill not connected to an asset purchase
• Purchase of shares in a corporation
• The vendor take-back portion of a purchase price
• Expenditures already financed on a conventional loan or line with the same lender

A clean use-of-funds schedule, line-itemed against these classes with the eligible/ineligible split made explicit, is one of the fastest signals to an underwriter that the borrower (or their plan writer) understands the program.

How do I build the use-of-funds schedule the underwriter wants?

Itemise every dollar, tag it to a cost class, and reconcile the total to the loan ask and the equity injection. A workable format:

Item	Cost class	Amount	Financed by
Commercial kitchen equipment	Equipment	$180,000	CSBFP term
Storefront build-out	Leasehold improvements	$140,000	CSBFP term
Franchise fee	Intangible assets	$35,000	CSBFP term
Opening inventory + first-quarter rent	Working capital	$40,000	CSBFP LOC
2% registration fee	Registration fee	~$8,000	CSBFP term (capitalised)
Owner's contribution	Equity	$50,000	Personal savings

Two checks the underwriter will run that the plan should pre-empt:

1. Sublimit compliance. Equipment + leasehold ($180K + $140K = $320K) sits under the $500K cap; intangibles + working capital ($35K + $40K = $75K) sits under the $150K cap. State these subtotals so the reviewer doesn't have to.
2. The contribution is real and sourced. The $50,000 equity line should name its origin (savings, asset sale, documented gift) because lenders generally finance up to about 90% of eligible costs — Scotiabank and CIBC both describe financing up to 90% — leaving the borrower to fund the balance. The program sets no fixed minimum injection, but a near-zero contribution is a credit-committee flag regardless of the guarantee.

What financial projections does a CSBFP lender expect?

The projections exist to answer one question: can the modelled cash flow service this loan? Build them to make the answer obvious.

• Monthly cash-flow projection for at least the first 12 months, plus annual projections for two to three years
• A debt-service coverage ratio (DSCR) — adjusted EBITDA divided by total debt service — shown explicitly and comfortably above 1.0×; many underwriters want to see roughly 1.25× or better
• A downside case that holds the loan serviceable if revenue lands, say, 15–20% below the base case
• Repayment terms in the model that match the actual ask — the rate, amortisation, and term being requested, not generic placeholders

The projections must reconcile to the use-of-funds schedule (the financed assets are the ones generating the modelled revenue) and to the repayment terms. Built properly, these sit inside a linked three-statement financial model so the cash that services the loan traces back to the income statement and balance sheet. A plan where the cash flow can't service the payment it's asking for fails the single test the guarantee does not cover.

What does the CSBFP loan actually cost the borrower?

Pricing is capped by the program, which the plan should reflect so the projections use a defensible rate:

• Floating term loan: maximum is the lender's prime rate + 3% (inclusive of the 1.25% annual administration fee)
• Fixed term loan: maximum is the lender's posted single-family residential mortgage rate + 3% (also inclusive of the 1.25% admin fee)
• Line of credit: maximum is the lender's prime rate + 5%
• Registration fee: 2% of the loan, paid by the borrower, usually capitalised into the loan; if financed, it counts toward the maximum limits

With Bank of Canada prime around 4.45% in early 2026, a floating CSBFP term loan caps near 7.45%, though strong files commonly price below the cap. Date any rate the plan cites — prime moves, and a projection built on a stale rate undermines the whole model.

What about personal guarantees and security?

A common misconception is that the CSBFP caps personal guarantees at 25% of the loan. It does not. The program allows a lender to take an unsecured personal guarantee up to the full original amount of the loan disbursed. The 25% figure that circulates comes from an illustrative example in the ISED guidelines, not a program cap.

What the program does require: for loans financing equipment-only or leasehold improvements, the lender takes security in the financed assets; for software, intangibles, or working capital, the lender takes a general security agreement over the business assets. The plan should acknowledge the security the lender will register and state the personal guarantee the owner is prepared to give — being explicit here reads as confidence, not exposure.

The bottom line

The CSBFP's 85% guarantee shifts the lender's risk appetite; it does not write the credit decision. The bank still carries 15% of the loss and underwrites accordingly, which means the plan has to do the same work any business loan plan does — prove repayment with projections that clear DSCR with a downside, itemise the use of funds against the program's eligible cost classes and sublimits, and show a real, sourced equity contribution. Bridge Note builds CSBFP-ready plans: we model the projections to the actual rate and term, structure the use-of-funds schedule against the $500K and $150K sublimits, and write the equity and security narrative the underwriter reads for owner commitment. We don't decide the loan — the lender does — and we never imply otherwise. We make sure the file gives the underwriter everything the guarantee leaves them to assess.

Frequently asked questions

Does the CSBFP government guarantee mean my plan doesn't need to convince the bank?

No. The CSBFP is delivered by banks and credit unions, not the government. The federal loss-sharing ratio is 85/15, so the lender still carries 15% of any loss and underwrites on its own credit criteria. ISED's guidelines state each lender applies its own lending criteria subject to program rules. The plan still has to demonstrate repayment capacity, a credible use of funds tied to eligible cost classes, and a capable operator. The guarantee changes risk appetite at the margin; it does not remove the underwriting step.

What is the maximum CSBFP loan and how is it split?

The maximum is $1.15 million per borrower: up to $1 million in term loans plus up to $150,000 in a line of credit. Within the $1M term portion, no more than $500,000 can go to equipment and leasehold improvements combined, and within that $500,000, no more than $150,000 can go to intangibles and working capital (added July 2022). Real property can be financed up to the full $1M. The $150,000 line of credit is over and above the term-loan working-capital allowance.

What use-of-funds costs are eligible under the CSBFP?

Term loans can finance real property, new or used equipment, new or existing leasehold improvements, intangible assets, working capital costs, and the 2% registration fee. Lines of credit can finance working capital costs and the registration fee only. Ineligible items include the borrower's own labour, goodwill not tied to an asset purchase, share purchases, vendor take-back portions, and expenditures already financed on a conventional loan with the same lender. Every dollar in the schedule must map to an eligible class.

What is the CSBFP interest rate cap?

For term loans, the maximum floating rate is the lender's prime rate plus 3%, and the maximum fixed rate is the lender's posted single-family residential mortgage rate plus 3% — both inclusive of the 1.25% annual administration fee. For lines of credit, the maximum is the lender's prime rate plus 5%. With prime around 4.45% in early 2026, a floating CSBFP term loan caps near 7.45%, though strong files often price below the cap.

How much does the borrower have to contribute to a CSBFP deal?

The program sets no fixed minimum equity injection, but participating lenders generally finance up to about 90% of eligible costs, leaving the borrower to fund roughly 10% plus any ineligible costs. Scotiabank and CIBC both describe financing up to 90% of eligible purchases. The plan should state the equity injection as a specific figure and name its source — savings, asset sale, or a documented gift — because underwriters read a real cash contribution as owner commitment.

Who pays the 2% CSBFP registration fee?

The borrower pays the 2% registration fee, calculated on the loan amount, and it is usually capitalised into the loan. If financed, it counts toward the maximum loan limits. There is also a 1.25% annual administration fee, but the lender remits that to the program out of the interest it already charges, so it is built into the rate cap rather than billed separately. The use-of-funds schedule should show the registration fee as a financed line item if it is being capitalised.

What financial projections does a CSBFP lender expect?

A monthly cash-flow projection for at least the first year and annual projections for two to three years, built so modelled operating cash flow services the proposed payment with margin. Underwriters look at the debt-service coverage ratio (adjusted EBITDA divided by debt service) and want it comfortably above 1.0× — often 1.25× or better — including a downside case. The projections must reconcile to the use-of-funds schedule and to the repayment terms actually requested.

Sources

1. Canada Small Business Financing Program Guidelines — Innovation, Science and Economic Development Canada, 2025
2. Helping small businesses get loans (program overview — limits, rates, eligibility) — ISED, 2025
3. Bulletin: 2022 changes to the Canada Small Business Financing Program — ISED, July 2022
4. Frequently asked questions — For small businesses (eligible financing) — ISED, 2025
5. Canada Small Business Financing Program — CIBC, 2026
6. Canada Small Business Financing Program — Fees and Details — CIBC, 2026
7. Canadian Small Business Financing Program — Term Loan — Scotiabank, 2026
8. How a bank looks at your business (DSCR and debt-to-equity) — BDC, 2026