Hello, I’m Eric Jordan. If you’re a business owner applying for a loan through the Canada Small Business Financing Program—or CSBFP—you need to understand how your business’s value is assessed. And more importantly, you need to know how to get that valuation right to meet the program’s guidelines and satisfy your lender.
Today, I’m going to explain how tangible and intangible assets come together to create your business’s true value—and why this matters to your CSBFP loan application.
Understanding the CSBFP Valuation Focus
When you apply for a CSBFP loan, your bank or credit union will look closely at your tangible assets—things like machinery, equipment, and physical property—because these assets are the primary security for the loan.
For example, your equipment might have a replacement cost of $100,000. This means if you had to replace all that equipment today, it would cost that much.
But here’s the critical part: lenders and the CSBFP don’t just consider replacement cost. They want to see the business as a going concern—meaning they want to know the full operational value, including everything that makes your business work and generate income.
The Importance of Intangible Assets
Beyond the physical assets, your business has many intangible assets that boost value:
According to Supreme Court of Canada and Tax Court of Canada rulings, intangible assets like these are capital assets that must be included in valuations when they provide enduring benefits linked to your tangible assets.
What the Law Says
Key court cases such as Gifford v. Canada, Canada v. GlaxoSmithKline, and Maréchaux v. The Queen have established that valuing tangible assets alone—without the surrounding intangible assets—is incomplete and undervalues your business.
More recent rulings, including MEGlobal Canada ULC v. The King and an unnamed 2025 Tax Court case, reaffirm that the synergy between tangible and intangible assets—like cash reserves, management, and client relationships—increases the true value beyond mere replacement costs.
What Does This Mean for Your CSBFP Loan?
Let’s go back to that $100,000 replacement cost example. When you add the value of transporting, installing, and integrating the equipment with your workforce, client base, and supply chain, the actual value recognized by lenders and the CSBFP can be $220,000 or more—more than double.
That’s why your valuation must capture both tangible and intangible assets. Doing so:
How the Eric Jordan 25 Factors Help
My 25 Factors Affecting Business Valuation methodology provides a detailed, practical way to capture this full value picture, covering everything from:
This method provides a clear, defendable valuation that meets the expectations of the CSBFP and lending institutions.
Every Business is Unique
Remember, not every business will see the same uplift from tangible replacement cost to total valuation. Your workforce, client base, supply chain reliability, and cash flow all affect the final number.
That’s why you need a comprehensive, tailored valuation—not just a number pulled from a replacement cost estimate.
If you’re applying for a loan under the Canada Small Business Financing Program, understanding how to properly value your business is key.
Replacement cost alone won’t cut it. You need to show the full value of your business—tangible and intangible combined—as confirmed by Canadian courts and reflected in the 25 Factors methodology.
Doing this right can open the door to financing that helps your business grow and succeed.
Thanks for listening. I’m Eric Jordan. If you want more help with business valuations or CSBFP loans, stay tuned or reach out.
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