CSBFP loan terms explained: rates, fees, personal guarantees and what happens in default

CSBFP loan terms are set by federal rules, not by each bank. Under the Canada Small Business Financing Program a borrower can get up to $1.15 million: $1 million in term loans plus a separate $150,000 line of credit. Rates are capped at prime plus 3% (floating) or the lender's residential mortgage rate plus 3% (fixed), and those caps already include the 1.25% administration fee. The 2% registration fee can be financed. For loans made since April 1, 2014, a lender can take an unsecured personal guarantee up to the full original amount, not 25%. In a default the government pays the lender 85% of its eligible loss, and the debt is not cancelled.

This guide covers the fine print only, using ISED's Guidelines and the Regulations as the source. For the plan itself, see how to write a CSBFP business plan; for whether CSBFP fits at all, see CSBFP vs BDC vs a big-bank loan.

CSBFP terms at a glance

The table below summarizes the core terms from ISED's CSBFP Guidelines and the Canada Small Business Financing Regulations.

Term	Program rule	Where it comes from
Term-loan maximum	$1,000,000 total; no more than $500,000 for anything other than real property (equipment, leaseholds); within that, no more than $150,000 for intangibles and working capital	Guidelines Item 3.1
Line of credit	$150,000, on top of the $1M term limit (since July 4, 2022)	Guidelines Item 3.2
Combined maximum	$1,150,000 per borrower	ISED small-business FAQ
Rate cap, floating term loan	Lender's prime + 3%, including the 1.25% admin fee	Guidelines Item 6.2
Rate cap, fixed term loan	Lender's posted single-family residential mortgage rate + 3%, including the admin fee	Guidelines Item 6.2
Rate cap, line of credit	Prime + 5%, including the admin fee	Guidelines Item 6.2
Registration fee	2% of the term loan (or of the authorized line of credit); can be financed	Guidelines Item 10.1
Administration fee	1.25% a year on outstanding balances, recoverable only through the interest rate	Guidelines Item 10.2
Maximum term	15 years of coverage for all term-loan classes; line of credit 5 years	Guidelines Item 6.1
Personal guarantee	Unsecured, up to the original amount disbursed (loans after March 31, 2014)	Guidelines Item 7.3; Regulations s.19(1)(a)
Corporate guarantee	Secured or unsecured, no limit	Guidelines Item 7.3
Government share of loss	85% of the lender's eligible loss	Guidelines Item 19

How much can you borrow under the CSBFP?

The maximum is $1.15 million per borrower, made up of two limits. The first is $1 million in term loans. ISED's Guidelines (Item 3.1) say no more than $500,000 of that can be for purposes other than real property — in practice, equipment and leasehold improvements — and within that $500,000, no more than $150,000 can go to intangibles and working capital. The second is a line of credit of up to $150,000, introduced on July 4, 2022, "over and above" the term limit (Item 3.2). ISED's small-business FAQ confirms the $1.15 million total.

A financed registration fee counts toward the class maximum it is attached to, so a $500,000 equipment request plus a financed 2% fee does not fit under the $500,000 cap. Related businesses share one limit unless they pass the Guidelines' independence test (Item 2.4).

What interest rate can a lender charge on a CSBFP loan?

A lender can charge any rate up to the program cap, which depends on the type of loan. ISED's Guidelines (Item 6.2) set three ceilings:

• Floating-rate term loan: the lender's prime rate in effect each day, plus 3%.
• Fixed-rate term loan: the lender's posted single-family residential mortgage rate for the matching term, plus 3%.
• Line of credit: the lender's prime rate plus 5%.

The Guidelines state each cap as "including the 1.25% annual administration fee." Some third-party guides show prime plus 3% plus 1.25%, which overstates the maximum by 1.25 points. These are ceilings, not prices: each lender prices within the cap, and prime differs from bank to bank, so ask for the lender's posted prime and proposed spread.

What fees come with a CSBFP loan?

A CSBFP loan has two program fees. The lender's own fees are separate.

The 2% registration fee. Item 10.1 of the Guidelines sets it at 2% of the term loan, or 2% of the authorized amount for a line of credit, charged again when the line is re-registered at its five-year renewal. The lender remits it to ISED; the borrower bears the cost and can finance it into the loan.

The 1.25% annual administration fee. Item 10.2 says the lender pays ISED 1.25% a year on outstanding balances, and the fee "can only be charged to the borrower as part of the interest rate." It should never appear as a separate charge.

Lender fees. Banks may charge their own application or set-up fees; ATB's CSBFP page notes that "other loan application fees may apply." ISED's small-business FAQ says these are paid directly to the lender and cannot be financed under the program. Ask for them in writing before you sign.

How long is a CSBFP loan term?

Government coverage runs up to 15 years for every class of term loan. ISED's 2022 changes bulletin and Item 6.1 of the Guidelines set that single maximum from July 4, 2022.

Coverage and amortization are different things. The Guidelines allow amortization longer than 15 years (they give 25 years as an example), with at least one principal and one interest payment a year. TD describes up to 15 years on equipment and leaseholds and up to 25 years' amortization on real property. CIBC says any balance remaining after 15 years "must be converted to a conventional loan."

A CSBFP line of credit runs five years. Under Items 6.1 and 11.2 it can then be re-registered with a new 2% fee or converted to a term loan with up to 10 years of coverage. Lenders generally match the term to the asset's life or the lease length, so 15 years on seven-year equipment invites questions.

What does a CSBFP loan cost? An illustrative example

The example below shows how the term changes the payment on one loan: $300,000 for equipment and leaseholds plus the $6,000 registration fee financed, for $306,000 of principal. The rate is an illustrative 7.45%, an assumption only. It is not a current quote or a statement of today's prime rate. Payments are monthly and fully amortizing.

Amortization	Monthly payment	Total paid	Total interest (admin fee included in rate)
5 years (60 months)	≈ $6,124	≈ $367,461	≈ $61,461
10 years (120 months)	≈ $3,624	≈ $434,915	≈ $128,915
15 years (180 months)	≈ $2,828	≈ $509,035	≈ $203,035

Illustrative rate only. Recalculate with the lender's posted prime and proposed spread. Lender set-up and renewal fees are excluded.

Going from five to 15 years cuts the payment by more than half and adds about $141,574 of interest. A lower payment helps debt-service coverage, but costs more over the loan's life. ISED doesn't publish a CSBFP calculator, so rerun the numbers at the rate offered.

Does a CSBFP loan require a personal guarantee, and is it capped at 25%?

A CSBFP lender can ask for a personal guarantee, and for any loan made after March 31, 2014, it is not capped at 25%. Many online guides still get this wrong.

The current rule. Item 7.3 of ISED's Guidelines says: "A lender can take unsecured personal guarantees up to the original amount of the loan disbursed." On a $306,000 loan, a guarantee can be as high as $306,000.

Where the 25% figure came from. Section 19(1)(a) of the Canada Small Business Financing Regulations sets the limit as "in the case of a loan made before April 1, 2014, 25% of the original amount of the loan, and in the case of a loan made after March 31, 2014, the original amount of the loan." ISED's April 2014 bulletin said it plainly: "Remove the 25% limit on personal guarantees."

Why some banks still say "25%". TD's CSBFP page states: "Personal guarantee required, starting at 25% of the loan amount." That is a bank's own starting point, not a program ceiling.

Face value, not a percentage. The Guidelines say a guarantee is "considered at its face value not as a percentage." Their example: a $50,000 guarantee on a $200,000 loan must be enforced for $50,000. Read the dollar figure you sign.

It must be unsecured. ISED's Guidelines say "personal assets cannot be used to secure a CSBF loan," and a loan may be ineligible if the lender takes a personal guarantee secured by collateral. The lender secures the business assets, not your home.

Corporate guarantees have no limit. They can be secured or unsecured, and "there is no limit on the amount of the corporate guarantee."

Sole proprietors and partners are fully liable. If the business isn't incorporated, you are the borrower, "liable for 100% of the repayment of the CSBF loan disbursed," on top of any guarantees from other people. Under Item 22.3, post-judgment recovery from personal assets is capped at the original amount disbursed plus interest, taxed costs, legal fees and other costs.

Who signs	Personal exposure under CSBFP rules
Owner of an incorporated borrower	Only through a personal guarantee: unsecured, up to the original amount disbursed
Sole proprietor or partner	Liable for 100% of the loan disbursed as the borrower, plus any other guarantees
Related corporation	Corporate guarantee, secured or unsecured, no limit

The lender sets the guarantee within those limits. Lenders weigh owner equity, business security and repayment capacity when sizing it.

What happens if you default on a CSBFP loan?

In a default, the lender collects first, the government shares the loss second, and the debt survives. The 85% is loss-sharing between the government and the lender after collection, not a guarantee of 85% of your loan.

The lender must collect first. Items 22 and 22.2 of the Guidelines say that after demand the lender "must take any or all of the following measures to minimize its loss," including realizing on "any security and guarantees," and that "a lender must take reasonable steps to collect from guarantors."

Then the lender files a claim. Under Item 25.1, a regular claim comes "after realization on all security, guarantees and/or personal liability" is complete; earlier claims are rejected as premature.

The Minister pays 85% of the eligible loss. Item 19 says "the Minister pays 85% of the lender's eligible loss on each claim submitted." The lender carries the other 15%.

The debt is not cancelled. Item 25.2.2 says the Minister "then becomes subrogated to the rights of the lender to the extent of the amount paid." The government steps into the lender's shoes for what it paid. The claim does not release the borrower or the guarantors.

How often it happens. ISED's Overview and Highlights 2024–25 report says the program paid 758 claims worth $80.4 million in 2024–25, an average of $106,110 per claim, on loans made over the previous 10 to 15 years.

What to ask the lender before you sign

The lender makes the credit decision on its own criteria within the program's rules. Before you sign, ask for the rate, spread and base rate; whether the registration fee is financed; every lender fee in writing; the dollar amount of each guarantee; and the plan for any balance at year 15.

Bridge Note, a Canadian business plan service that writes lender-ready plans for CSBFP, BDC, and big-bank loan applications, maps the use of funds to these program classes and models repayment at the requested term. Our CSBFP page covers what that plan includes.

The bottom line

The rate caps include the 1.25% administration fee, the 2% registration fee can be financed, and term-loan coverage runs 15 years for every asset class. Read the guarantee closely: since April 1, 2014, it can be unsecured up to the full original amount, enforced at face value, and a 25% figure is bank policy, not a program cap. In a default, the government's 85% share pays the lender and does not erase what you or your guarantors owe. If you're preparing a CSBFP application and want the plan built around these terms, book a discovery call.

Frequently asked questions

Is the CSBFP personal guarantee capped at 25%?

Not for any loan made after March 31, 2014. Section 19(1)(a) of the Canada Small Business Financing Regulations limits the 25% cap to loans made before April 1, 2014, and ISED's April 2014 bulletin announced its removal. Under the current Guidelines a lender can take an unsecured personal guarantee up to the original amount of the loan disbursed. When a bank such as TD says its personal guarantee starts at 25%, that is the bank's own policy, not a program limit.

Does the CSBFP interest rate cap include the 1.25% administration fee?

Yes. ISED's Guidelines state each cap as including the 1.25% annual administration fee: prime plus 3% for a floating term loan, the lender's posted single-family residential mortgage rate plus 3% for a fixed term loan, and prime plus 5% for a line of credit. The lender owes the fee to the program, and the Guidelines say it can only be charged to the borrower as part of the interest rate, never as a separate line on top of the cap.

Can the lender take a lien on my house to secure a CSBFP loan?

No. ISED's Guidelines say personal assets cannot be used to secure a CSBF loan, and a loan may be ineligible if the lender takes a personal guarantee secured by collateral. The personal guarantee itself must be unsecured. That does not make your personal assets untouchable: if a lender later wins a court judgment on an unsecured guarantee, or you are a sole proprietor or partner, the debt can still be enforced against you personally within the limits the program sets.

If my business defaults, does the government pay off the CSBFP loan?

No. The lender must first realize on the business security and take reasonable steps to collect from guarantors. It then files a claim, and the Minister pays 85% of the lender's eligible loss. The Minister is then subrogated to the lender's rights to the extent of that payment, so the debt is not cancelled. The claim compensates the lender; it does not release the borrower or the guarantors.

How long can a CSBFP loan run?

Since July 4, 2022, government coverage runs up to 15 years for every class of term loan, and the Guidelines allow amortization longer than 15 years. TD, for example, describes up to 25 years' amortization on real property. CIBC says any balance left after 15 years must convert to a conventional loan. A CSBFP line of credit runs five years, after which it can be re-registered with a new 2% fee or converted to a term loan of up to 10 years.

Sources

1. Canada Small Business Financing Program Guidelines — Innovation, Science and Economic Development Canada
2. CSBFP Guidelines, April 2024 (PDF) — ISED
3. Canada Small Business Financing Regulations (SOR/99-141), section 19 — Justice Laws Website, Government of Canada
4. Bulletin — April 2014 — ISED
5. 2022 Changes to the CSBFP — ISED
6. Frequently asked questions — For small businesses — ISED
7. Frequently asked questions — For lenders — ISED
8. CSBFP Presentation: Making a Loan — ISED
9. Overview and Highlights 2024–25 — ISED
10. Canada Small Business Financing Loan — TD Bank
11. Canada Small Business Financing Program — Fees and Details — CIBC
12. CSBFP Loan — ATB Financial