Federal Budget Recommendations: Ways to unleash SME productivity using the Canada Small Business Financing Program
The Canada Small Business Financing Program (CSBFP) needs an urgent overhaul to address today’s small business financing barriers. The program has not kept pace with the realities of rent volatility, succession risk, and constrained credit markets. It also fails to address two rising SME pressures: volatile, high-cost commercial rents, and limited pathways to purchase businesses as a generation of owners retires.
- Enable Commercial Property Ownership
Ownership offers stability in the face of expensive unpredictable rent fees—but financing for property purchases through the CSFBP is too small, with eligibility too difficult for many small businesses and medium-sized businesses despite the program’s aim to support them.
We recommend expanding eligibility so that businesses can apply CSBFP funding toward commercial property down payments, and increasing the property ownership cap from $1,000,000 to $5,000,000. Stabilizing occupancy costs frees up capital for hiring, innovation, and growth.
- Finance Business Succession and NextGen Ownership
Canada is undergoing a $2 trillion ownership transition – while buyers exist, sales fall through due to lack of affordable financing. By enabling loans for small business and medium-sized business acquisitions, the CSBFP can help local entrepreneurs keep businesses open, jobs intact, and assets in Canadian hands. We propose making business acquisition an eligible purpose for the CSFBP.
The Need for Reform is Backed by Government Data
The 2024 federal evaluation of the CSBFP highlights the urgency: half of all borrowers found the terms reasonable, and even fewer found the fees fair. Lenders viewed the product as too risky, despite high borrower needs.
Additional Recommendations
- Lower the registration fee from 2% to 0.5%
- Incentivize lenders to drop interest margins by 1%
- Target an effective interest rate near 7.0%
- Review loan guarantee design to better de-risk lending and unlock access
Together, these reforms would align the CSBFP with today’s economic challenges—stabilizing business costs, enabling ownership, and unleashing a new wave of SME-led growth.
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