An earlier post about the Canada Small Business Financing Program provided an overview about the program including eligibility criteria. However, there are other programs targeted toward specific aspects of running a business such as purchase of real estate, equipment, etc. that could be used by an entrepreneur. This post looks at some of those targeted programs.

Commercial Real Estate Financing

The Business Development Bank of Canada (BDC) offers the land and building finance program to help businesses buy new land, construct or buy a building, expand or renovate an existing building and replenish the working capital that may have been used for real estate needs.

The program has a repayment period of up to 25 years with the borrower having an option to defer principal repayment for up to 3 years at the time of loan approval. The borrower can prepay up to 15% of the loan without penalty on a yearly basis. The collateral required through this program excludes personal assets to limit (personal) liability.

Equipment Financing

BDC’s Equipment Line provides businesses with financing to purchase equipments for operational needs over a 12-month period. New or used equipment such as production line machinery, lab tools, commercial vehicles used for shipment of goods, etc. qualify under this program.

In addition, the financing may also be used to cover the cost of delivery of the equipment, its installation and subsequent training for users. The program has a repayment period of up to 5 years with the option to defer principal repayment for 1 year at the time of loan approval. The loan may be prepaid without penalty at any time.

Energy Loan for Agricultural Businesses

The Energy Loan is offered to encourage the use of renewable energy in the agricultural sector. Canadian agri-business owners can take advantage of this loan to purchase and install a renewable energy source such as geo-thermal, wind, solar, etc. for their operation.

Evidently, the program is designed to bring down the business owner’s energy costs, while reducing the demand on the conventional power grid and help minimize environmental impact. The loan is secured with real estate or other personal property.

Canadian Agricultural Loans Act program

The Canadian Agricultural Loans Act (CALA) program aims to provide agricultural producers with a repayable loan guarantee and assist them in obtaining access to credit in an easier manner. The program is backed by the federal government, which, under the Act, guarantees the repayment of 95% of the loan to the lender. The loan is available to new and existing farmers who may use the money to establish and/or improve their business, provided the requirements of the Act have been met. The maximum loan amount available is limited to $500,000 for the purchase of land and purchase and/or construction of buildings and $350,000 for all other purposes.

The four programs discussed above are available throughout Canada. However, there are several programs in place that are offered at a provincial level or restricted to a few provinces (e.g. Western Diversification Program). A list of province or region-specific programs can be found through this link.

Have you taken advantage of any of these financing programs? Did you become aware of any special requirements as you progressed through the application process?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.

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