Glossary

Canadian business loan and plan terms.

Plain-language definitions of the terms that come up in a BDC, CSBFP, big-six, or Provincial Nominee Program application — the ones that, when missing or wrong in a business plan, get the file sent back.

BDC— Business Development Bank of Canada: Federal Crown corporation that lends directly to Canadian businesses. Tolerates thinner credit history than chartered banks; serves start-ups the big six won't fund. Programs include the Small Business Loan (up to $350K), Commercial Real Estate, Tech Capital, and LIFT (AI / tech adoption).
CSBFP— Canada Small Business Financing Program: Federal loan-loss-sharing program (85% government guarantee to participating lenders). Caps at $1.15M per business — a $1M term loan plus a $150K line of credit. Funds equipment, leasehold improvements, real estate, and intangibles up to $150K.
DSCR— Debt Service Coverage Ratio: Operating cash flow divided by total debt-service payments. Canadian banks typically require DSCR ≥ 1.25× on the modelled cash flow. BDC guides to 1.10–1.20×. DSCR below 1.0× is an automatic decline — projected cash flow doesn't cover the debt.
Equity injection: The borrower's own cash contribution to the project. Most Canadian lenders expect 15–25% on standard small-business loans, 30–50% on franchise deals, minimum 10% under CSBFP. Equity reduces the lender's exposure and signals owner commitment.
Use of funds: Line-itemed breakdown of how the loan will be spent — equipment, leasehold improvements, working capital, debt refinancing, etc. Lenders require specifics, not buckets. CSBFP and BDC both publish category templates the breakdown should follow.
Working capital: Current assets minus current liabilities — the cash available to fund day-to-day operations. CSBFP only finances working capital through its LOC portion, not the term loan. Most plans understate working-capital needs and trigger lender questions.
Owner contribution: Same as equity injection in most contexts. Lenders also weigh non-cash contributions (equipment, vehicles, real estate the owner already owns and pledges), but cash injection carries the most weight.
Collateral: Assets pledged to secure the loan. Big-six banks favour tangible collateral (real estate, equipment, accounts receivable). BDC accepts thinner collateral than the big six. CSBFP collateral is shared between the lender and the federal guarantee.
Personal guarantee— PG: The owner's personal commitment to repay the loan if the business defaults. CSBFP caps PG at 25% of the loan amount. Big-six banks typically require full PG. BDC's PG requirements are deal-specific.
Vendor takeback— VTB: A seller-financed note covering part of a business-purchase price — typically 10–15% of deal value per BDC guidance. The seller stays as a creditor for 3–5 years at a negotiated rate. Common in Canadian small-business acquisitions to bridge the gap between buyer equity and senior bank debt.
CCA— Capital Cost Allowance: Canada's depreciation tax deduction for capital assets. Rates are set by asset class (Class 8 — 20% for furniture and equipment; Class 1 — 4% for buildings; etc.). CCA must be modelled in cash flow projections — missing it understates after-tax cash.
CCPC— Canadian-Controlled Private Corporation: Tax status for private Canadian corporations meeting specific ownership and residency tests. CCPCs qualify for the federal small-business deduction (lower corporate tax rate on the first $500K of active business income). Status affects every line of the projected income statement.
Big six: The six largest Canadian chartered banks: RBC, TD, BMO, Scotiabank, CIBC, and National Bank. They lend their own capital, expect tangible collateral, and offer lower rates for strong files (prime + 1–3% typical). All six participate in CSBFP.
Credit union: Member-owned cooperative financial institution. In Canada the largest include Vancity, Meridian, Coast Capital, and Desjardins. Credit unions often fund deals the big six decline, particularly for regional borrowers or sectors the chartered banks under-serve.
Prime + margin: How most Canadian commercial loans are priced. Prime is set by the Bank of Canada policy rate plus each lender's spread; margin is the risk premium added on top. Late-2025 prime in Canada was around 4.45%. Big-six small-business loans typically price at prime + 1–3%.
Goodwill: The premium paid over a target's tangible book value when buying a business. CSBFP allows intangibles (including goodwill) up to $150K. BDC may finance some goodwill case-by-case. Big-six banks limit goodwill financing — buyers typically cover it via vendor takeback or additional equity.
EBITDA— Earnings Before Interest, Taxes, Depreciation, Amortization: Standard cash-proxy metric for business valuation. Canadian small businesses sell at 3–6× trailing 12-month EBITDA in most sectors. Lenders prefer to see a Chartered Business Valuator (CBV) report on EBITDA-multiple valuations for deals above $500K.
PNP— Provincial Nominee Program: Provincial immigration streams that allow each province to nominate entrepreneurs for permanent residency. Investment minimums and net-worth thresholds vary by province (BC: $200K invested + $600K net worth; Manitoba: $150K outside Winnipeg + $500K net worth; etc.).
SUV— Start-up Visa: Federal immigration program for entrepreneurs with venture-capital, angel-investor, or business-incubator support. PAUSED as of January 1, 2026 — IRCC stopped accepting new Commitment Certificates from designated organizations on December 31, 2025. Existing applications continue to process; queue over 10 years.
LMIA— Labour Market Impact Assessment: Federal labour-market test required for most Temporary Foreign Worker hires. Does NOT apply to entrepreneur and investor immigration categories. The Owner-Operator LMIA pathway (for foreign owners running Canadian businesses) was effectively phased out in April 2021.
RCIC— Regulated Canadian Immigration Consultant: Federally licensed immigration consultant. Bridge Note is not an RCIC — immigration plans we write support an applicant's file but cannot replace RCIC advice on the immigration process itself.
IRCC— Immigration, Refugees and Citizenship Canada: Federal department responsible for immigration programs and decisions. Sets requirements for SUV, PNP, and entrepreneur streams. Immigration business plans address IRCC's published evaluation criteria for the specific program.
ISED— Innovation, Science and Economic Development Canada: Federal department that administers the CSBFP and publishes Canada's official small-business credit-availability data. ISED data is the primary source for Canadian SME lending trends — average loan rates, approval rates, collateral statistics.
FDD— Franchise Disclosure Document: Mandatory disclosure document franchisors must provide franchisees in Ontario, BC, New Brunswick, Manitoba, and PEI — at least 14 days before signing or paying. Alberta has no franchise-specific disclosure law. The business plan should summarize key FDD elements (royalty rate, marketing fund, territory rights, renewal terms) regardless of province.