AFO · Stack
Funding the entry and the fulfilment, on the same plan.
Exporters face two distinct capital gaps simultaneously: the up-front cost of entering a new market (research, travel, trade shows, IP protection, translation) and the working-capital cycle of fulfilling export orders (longer DSO, currency exposure, foreign-buyer credit risk). Different instruments cover each gap; the right structure layers two or three of them together rather than picking one. The CPA designs the financing plan and the FX hedge against the same set of assumptions so the export plan and the capital plan don’t drift apart.
What this stack delivers
- CanExport SME funds entry costs at 50%, non-repayable, capped at $50K.
- EDC guarantees + ABL / factoring handle the working-capital cycle.
- FX hedge modelled alongside the financing structure.
How this stack works
Exporter stack, layered correctly.
CanExport SME funds the entry side — up to 50% of eligible market-entry expenses, capped at $50K per project. Non-dilutive, non-repayable, project-scoped. The eligible expense list is deliberately broad: travel to the target market, trade-show participation, market research, IP protection in the target jurisdiction, translation of marketing materials, digital marketing aimed at the foreign audience. The constraint is that the target market must not currently represent more than 10% of sales — it’s a market-entry program, not a market-deepening program.
Export Development Canada (EDC) provides working-capital facilities and loan guarantees that let domestic lenders stretch on businesses growing into new markets. The EDC guarantee covers the incremental risk the chartered bank wouldn’t otherwise take, which often makes the difference between getting funded and not when an exporter’s growth outpaces the credit committee’s comfort. EDC programs sit outside the AFO catalog today (added as we close deals through them), but they are the second leg of the standard exporter stack.
On the AR side, an ABL revolver or invoice factoring handles the working-capital cycle of fulfilling export orders. ABL fits exporters with strong domestic-customer AR; factoring fits exporters with concentrated or longer-DSO foreign-buyer AR. Foreign-buyer credit insurance — usually arranged through EDC’s insurance programs — covers the credit-risk side of the foreign AR. Currency hedging through FX forwards and options is a separate but related decision; a profitable USD contract becomes unprofitable if the loonie strengthens 5% during the production cycle.
5 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.
CanExport SME
LiveFamily: Grants & refundable tax credits
Role in this stack: Funds the market-entry cost — travel, trade shows, research, IP, translation, digital marketing.
Typical size: Up to 50% of eligible costs, capped at $50K per project
ABL Revolver (Asset-Based Lending)
Coming soonRole in this stack: Working-capital revolver scaled to the AR base, including domestic + foreign customer AR.
Typical size: 85% advance on AR, 50–65% on finished-goods inventory
Role in this stack: Alternative to ABL when the foreign-buyer AR is concentrated or the cycle is too long for an ABL.
Typical size: 1–4% per invoice depending on credit and aging
Role in this stack: Term loan or revolver covering the broader expansion ramp where the exporter is growing into a new market.
Typical size: $500K–$25M, Prime + 1–4%
Role in this stack: Funds equipment + leaseholds tied to the expansion (e.g., a new production line dedicated to the export market).
Typical size: Up to $1.15M combined ceiling
When this stack fits
Who this is the right answer for.
Canadian businesses with at least one full-time employee, $100K–$100M in revenue, and a real target export market that currently represents less than 10% of sales. The default stack for first-time exporters and exporters entering a new geography.
Common variations
Tech-enabled exporters often layer SR&ED and IRAP underneath the export stack to fund the technical-product side of the localization or platform work. Manufacturers exporting often layer CSBFP equipment underneath when the export-market work requires new production capacity.
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.
- 8 layers
Manufacturer growth stack
Manufacturers carry hard assets, long working-capital cycles, and a programmatic R&D spend — three traits that open distinct funding pools in the Canadian system. The default growth-stage stack layers equipment finance (the asset side), ABL or senior revolvers (the working-capital cycle), and the non-dilutive R&D layer (SR&ED + IRAP + Clean Tech ITC where applicable). Each piece is independently underwritten but designed against a single business case so the lenders and the grant programs see a coherent overall plan.
Read the stack
- 3 layers
CSBFP + working-capital line
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.
Read the stack
- 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
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.