AFO · Stack
CSBFP funds the assets; the revolver funds the cycle.
The single most common owner-operator capital stack in Canada layers a CSBFP equipment + leasehold loan with a conventional working-capital revolver. CSBFP covers the asset purchases at the cheapest available rate (Prime + 3%, government-guaranteed); the revolver handles the AR + inventory cycle. The two facilities never compete for the same dollar — they fund different parts of the business — but the package needs to be designed together so the lender sees a coherent overall ask.
What this stack delivers
- CSBFP covers the asset purchase at Prime + 3%, government-guaranteed.
- Working-capital revolver handles the cycle (AR + inventory).
- Both lenders underwritten together — sequencing matters.
How this stack works
CSBFP + working-capital line, layered correctly.
CSBFP’s ceiling of $1.15M (combined equipment + real property) makes it almost always the right first dollar for an owner-operator buying equipment, fitting out a leasehold, or purchasing the building they operate from. The 2% one-time registration fee plus Prime + 3% rate beats any conventional alternative for sub-$1.15M asset purchases. The government guarantee lets the lender stretch on the borrower’s credit profile in ways conventional senior would not.
The working-capital revolver — typically Prime + 1–4% on a conventional senior facility, scaling to ABL for businesses with material AR + inventory — fills the gap CSBFP doesn’t touch. CSBFP cannot fund working capital, refinancings, or acquisitions, so the revolver is a separate piece of paper from a separate underwriter (sometimes the same bank, sometimes not). The CPA models the combined coverage and total drawn position so the second lender sees the full picture before underwriting.
The trap most owner-operators fall into is sequencing: closing the CSBFP first, then trying to add a revolver and finding the bank balks at the additional security position. The right approach is to put both lenders in the room together at the start — or to underwrite the combined package once and shop it to a single lender willing to hold both sides. The CPA structures this conversation before the first term sheet lands.
3 layers in the stack
The layers, in order.
Each layer below names the program AND the role it plays inside this specific stack — what it funds, how much of the structure it covers, and how it interacts with the layers above and below.
Role in this stack: Funds equipment + leaseholds + real property at Prime + 3%, government-guaranteed.
Typical size: Up to $1.15M combined ceiling
Role in this stack: Working-capital revolver handling the AR + inventory cycle.
Typical size: $500K–$25M, Prime + 1–4%
ABL Revolver (Asset-Based Lending)
Coming soonRole in this stack: Replaces the senior revolver once the AR + inventory base is large enough to support it.
Typical size: $1M+, 85% advance on AR, 50–65% on finished-goods inventory
When this stack fits
Who this is the right answer for.
Most owner-operator businesses under $10M revenue buying $100K+ of equipment or leaseholds AND needing a working-capital line. The default stack for early-revenue and growth-stage operating businesses.
Common variations
Above the $1.15M CSBFP ceiling, the same shape becomes conventional senior + ABL revolver. Below ~$200K of asset purchases, an equipment-finance lease often replaces the CSBFP side because the speed and simplicity outweigh the rate difference.
Common questions
Questions people ask about this stack.
The answers below are the specific Q&A patterns that come up on this combination. For broader AFO questions, the main module FAQ on the module landing page covers the cross-stack basics.
Other stacks
Different question, different combination.
Each stack solves a distinct capital-structuring question. The ones below cover the other common shapes — non-dilutive R&D, leverage stacks for buyouts, project-grant stacking for clean tech, working-capital cycles for exporters, and the broader owner-operator default.
- 3 layers
SR&ED + IRAP
SR&ED and IRAP are the two workhorses of Canadian R&D funding. They cover overlapping eligible expenditures but work through fundamentally different mechanisms — SR&ED is a refundable tax credit claimed in arrears against the corporate return; IRAP is a contribution program with pre-approval and draw-down funding. Run together on the same project, the two programs fund a meaningful share of a Canadian tech company’s technical labour. The trap is double-claiming the same hours: IRAP cannot pay for time also claimed as SR&ED, and the timesheet discipline matters.
Read the stack
- 3 layers
MBO leverage stack
Management buyouts are leverage transactions first and equity transactions second. The senior tranche carries the cheapest dollar but the tightest covenants; the mezzanine layer unlocks the upper-leverage band at higher coupon; the vendor note bridges the equity-injection gap; the management team injects the equity that closes the deal. Each layer has distinct economics that compound over the five-to-seven years it usually takes to retire the debt — and the wrong ratio at close costs the management team materially at exit.
Read the stack
- 6 layers
Clean-tech grant stack
Canada has built one of the deepest federal funding stacks in the world for clean technology, but the programs don’t self-orchestrate — each has its own application, eligibility, and matching-capital rule. The skill is layering them coherently so the project carries the lowest blended cost of capital without disqualifying itself from any individual program by stacking-rule conflict. Done well, a Canadian clean-tech project can pull 40–60% of total project cost as non-repayable contributions plus refundable tax credits, with the balance covered by senior debt or strategic equity.
Read the stack
Stack design is where the engagement starts.
Twenty-minute call. Bring the business profile and the capital ask; we’ll walk through which layers fit, which programs in each layer to pursue, and the sequencing that keeps lenders and grant programs from tripping on each other.