How Canadian Small Businesses Can Access Government Loan Programs

In 2022, approximately 7% of small businesses in Canada requested government funding, including grants and loans. Years later, this figure is likely higher, considering there were 1.19 million small businesses in the country in 2022 compared to the 1.29 million in 2024, and almost 98% of Canadian businesses are small companies. 

If you’re a small business in need of financing, it might be time to consider the offering of government business loans in Canada. Today’s guide will examine small business funding in Canada. Bizfund dives into the best government loan programs available, the eligibility requirements for these loans, and application tips to help you cross the finish line. 

Available Loan Programs

Although there are government business loans in Canada on offer for small businesses, there are not as many as you might believe. So to help limit your research time and give you a comprehensive resource, we’ve discussed four of the best available loan programs below that you might want to explore if you need funding. 

Canada Small Business Financing Program (CSBFP)

The Canada Small Business Financing Program (CSBFP) is by far the most preferred option for those looking for funding. In fact, it’s so popular that between 2023 and 2024, 6,238 loans were delivered to small businesses totalling a whopping $1.8 billion. Additionally, since its inception, the loan has helped over 50,000 Canadian small companies expand their operations. 

This loan program is best suited for individuals who need to secure funding for large purchases. With this loan, you can borrow up to $1 million, with half expected to be used for equipment or leased improvements and the rest for renovations or property improvements. However, with this loan, the government isn’t lending it to you directly. Instead, they guarantee part of your loan through your credit union or bank. By doing things this way, it’s easier for lenders to approve financing, especially if your business is newer and doesn’t have a long credit history. 

It’s also important to know that this government loan program is only for for-profit Canadian companies that have a revenue totalling less than $10 million. 

Black Entrepreneurship Loan Fund

If you are a Black small business owner seeking government financing, you may want to consider the Black Entrepreneurship Loan Fund. This community-driven fund supports Black Canadian business owners who need access to flexible and fair funding. 

The Black Entrepreneurship Loan Fund is backed by the Government of Canada, the BDC, and FACE, and currently offers loans ranging from around $25,000 to $250,000. This funding is intended to support the growth and expansion of Black businesses like yours. However, in addition to providing financing, FACE also connects entrepreneurs with mentorship and training resources. 

The Aboriginal Entrepreneurship Program (AEP)

Entrepreneurs belonging to First Nations, Métis, or Inuit communities can apply for the Aboriginal Entrepreneurship Program (AEP). This government-backed financial program will help you, as a member of one of these communities, grow your small businesses through not only financing but also guidance reflective of local needs. 

However, it’s essential to know that this program is technically not a loan, but rather a grant program. Indigenous Services Canada supports the AEP with funding delivered through Métis Capital Corporations and Indigenous Financial Institutions. Currently, this program offers entrepreneurs up to $99,999, and community-owned ventures can receive up to $250,000. 

BDC Inclusive Entrepreneurship Loan

The Business Development Bank of Canada offers the Inclusive Entrepreneurship Loan. Since the BDC is a federal crown corporation, this loan is considered government-backed. The purpose of this loan program is to assist underrepresented entrepreneurs in achieving success. 

Qualifying underrepresented entrepreneurs can access up to $350,000 for equipment, tech upgrades, or growth. It’s also worth noting that this loan program is designed to be more accessible to small businesses, as the loan is publicly funded. 

Eligibility Criteria

Now that you have a better understanding of the government loan programs, it’s a good idea to learn more about eligibility. Below, we’ve broken down potential eligibility requirements (which can change from time to time) for each of the loan programs. 

Canada Small Business Financing Program Eligibility

The Canada Small Business Financing Program is not open to charitable, religious, or farming organizations. These are some of the qualifying criteria that need to be met: 

• Businesses must be operating or plan to operate in Canada.
• Applicants are required to apply through a participating financial institution.
• Gross revenue must be less than $10 million a year (as mentioned earlier).
• The borrower (you) is required to personally guarantee the loan.
• Eligible business structures are partnerships, sole proprietors, and corporations.

Black Entrepreneurship Loan Fund Eligibility

Only for-profit small businesses can apply for the Black Entrepreneurship Loan Fund. Here’s a closer look at other requirements: 

• Applicants must have a business with a minimum of 51% Black ownership or control.
• Small businesses need to be registered and operate in Canada.
• Owners must be 18 years or older and be either permanent residents or Canadian citizens.
• Applicants have to provide financial statements and a viable business plan.

Aboriginal Entrepreneurship Program Eligibility

To qualify for the Aboriginal Entrepreneurship Program, applicants must own a small business that is majority indigenous-owned and operated. Below are a few other requirements: 

• Only applicants from Métis, Inuit, and First Nations communities are eligible to apply.
• Applicants must apply through a Métis Capital Corporation or an Indigenous Financial Institution (as mentioned previously).
• Those applying need to present a feasible business plan and proof of indigenous community affiliation or identity.

BDC Inclusive Entrepreneurship Loan Eligibility

To qualify for the BDC Inclusive Entrepreneurship Loan program, your business must be at least 51% owned and led by women entrepreneurs, indigenous entrepreneurs, or black entrepreneurs. Here’s a look at what else is needed: 

• The company must have a reasonable credit history and a proven ability to repay the government-backed loan.
• Applicants must be registered and based in Canada, be 18 or older, and be either permanent residents or Canadian citizens.
• Funds must be used for business development, such as working capital, equipment, technology, or expansion.
• The annual revenue for small businesses must (typically) be below $3 million.
• Small businesses must present a clear business plan that outlines a growth strategy, objectives, and the use of funds.

Government Loan Program Application Process

Each government loan program will have its application nuances, but we can share a few generalized steps in the application process: 

1. Step One: Determine if you’re eligible for the loan by researching whether you meet the program’s eligibility requirements and whether your business fits the criteria before applying.
2. Step Two: Develop your business plan, which outlines your business’s services, goals, products, target market, repayment strategy, and financial projections.
3. Step Three: Gather supporting documentation to accompany your application, including personal and business tax returns, financial statements, registration documents, proof of ownership, identification, and licensing or permitting papers.
4. Step Four: Select a loan program, complete the lender’s application, attach the required documents, and apply through the bank, credit union, or specialized institution that offers the government-backed loan. You won’t apply directly to the government in most cases.
5. Step Five: Wait for approval as your business’s creditworthiness, collateral, and ability to repay are evaluated.
6. Step Six: Should approval be granted, sign the loan agreement, but make sure to check repayment terms, interest rates, and eligible uses. Usually, funds are released within a few weeks directly to your business or vendors.

Tips for Success

To successfully secure a government loan for your small business, you might want to keep a few helpful tips in mind. We’ve shared a brief look at what might be able to help you below: 

Have All The Information in One Place

If you plan on increasing your chances of securing a government loan program, you’ll likely need to send out a few applications. In this situation, it is helpful to have the necessary information in one place to save time. 

For example, it’s best to have documentation on hand outlining the: 

• Description of your small business.
• Your past three years’ financial statements.
• Your incorporation.
• The number of employees you have.

Having all this information upfront will help you fill out applications more quickly. 

Remember To Only Provide The Information Needed

Government loan programs have a responsibility to keep a level playing field. This means you’re limited in the information you can provide to secure funding because they need to evaluate each applicant on the same criteria and merit. That’s why it’s essential only to provide the information they need. However, this doesn’t mean you can’t offer additional information further down the road about your business and its benefits to Canada, by saying it is available upon request.  

Explain Your Reason For Needing Funding In Simple Terms

Since government loan programs have to be responsible and accountable in who they choose to fund, it makes the most sense to make it easy to understand why you need and deserve funding. 

This means you need to explain your project or business needs in the simplest way possible, making it easy for someone unfamiliar with your industry, service, or product to understand the value you present. We also recommend including realistic metrics that demonstrate how your company benefits Canada and the economy, further demonstrating its viability.

Key Takeaways

Now you know that gaining access to Canadian government loan programs (and a grant program) isn’t as difficult as you might have once believed, as long as you meet eligibility requirements. We hope that the insights we shared on loan options, eligibility, and tips for success help you find funding for your small business endeavors.

However, if you decide you don’t want to apply for a government loan program or don’t qualify, you can consider a merchant cash advance (MCA) with Bizfund. An MCA is ideal for small businesses that need fast funding of between $10,000 and $300,000 and have little credit history. You can learn more about Bizfund here and MCA’s here.