The Canada Small Business Financing Act (CSBFA) continues the small business loans program introduced in 1961 by the Small Business Loans Act (SBLA). Its main purpose remains the same: to increase the availability of financing for the purpose of the establishment, expansion, modernization and improvement of small businesses. Since that time, the program has been updated on a regular basis, to keep it current with changing economic conditions. In fiscal 2001-2002 some 11 142 small business loans, totaling $915.1, were registered under the Act. The average loan size was $82 134. For all the loans registered in 2001-2002, there was a total impact of 22 284 new jobs across Canada.

The Government of Canada underwrites 85 percent of lenders’ eligible net losses on defaulted loans registered under the program. Banks or other financial institutions, which assess the eligibility of applications, make these loans. Most small businesses starting up or operating in Canada -- excluding farming, charitable and religious enterprises – can be eligible as long as their estimated annual gross revenues do not exceed $5 million during the fiscal year in which they apply for a loan or a lease. Businesses may be operated as sole proprietorships, partnerships or incorporated companies.

As of April 1, 2002, in addition to the loan program, a new five-year Capital Leasing Pilot Project was launched to help small businesses access capital lease financing for new or used equipment.

Leasing companies (lessors) participating in the pilot project issues the capital leases. Lessors are expected to apply the same care for a capital lease as they would in the conduct of their ordinary business, that is to assess credit worthiness and administer the leases in accordance with their normal leasing practices and in accordance with the program requirements.

Most economically developed nations have similar government-backed loan programs to foster their small business sectors. A study by Dr. Allan Riding of Carleton University found the SBLA program to be one of the best, with administrative and default costs much lower than those of comparable programs in other OECD countries such as the United States, the United Kingdom, Germany and Japan.

Small Business Loans Administration - Industry Canada's Strategis