You Are Looking For the SBL – The Federal government small business loan.
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Government Small Business Loan approval success depends on the quality of information that you as a business owner have on being successful for this popular government program administered by Industry Canada.
We're going to provide some key explanations and information around the 'SBL', the common name for the Government Small Business Loan. And by the way, the loan amount is not that small for firms in the small and medium enterprise sector which are privately owned.
By the way, the actual name of Industry Canada's program is the 'CSBF'; the Canadian Small Business Financing program.
So forget all the acronyms, call it what you want, but if you're a smaller or newer business in Canada you might well want to consider utilizing the program - in recent times the government has increased the amount that can be borrowed - up to a million dollars in certain situations. That's a large amount, but here at 7 Park Avenue Financial typical loan amounts for the program tend to range in the 350k range on average.
How To Access the Government Guaranteed Loan:
There are a number of key stages in completing a successful funding for your business, not the least of which is being able to determine if you qualify.
Here are some key basics in the initial determination of qualifying:
Actual or business revenues must be less than $5 Million per annum.
The owner or owners of the business must have a decent personal credit history - typically this means a credit score in the 650 range - Safe to say that since it is a federal program your personal tax filings should be up to date - Bottom line - no tax arrears.
Understand what can be financed under the program - These loans are not cash or working capital loans - The loan is used to finance 2 key asset categories - equipment and leaseholds.
So our point... simply call it whatever you want, but consider using the program! And by the way, what's so 'SMALL' about 1/2 Million dollars. That’s the formal cap on the program, although most financings are done in the 350k range. Again, it’s probably just us, but that’s not small. Everything’s relative we guess.
Let’s examine the stages of getting a completed funding under the program. Stage one is of course determining if you qualify. Some basic guidelines are as follows - you first must have revenues or projected revenues under 5 million dollars. We say ‘projected' because thousands of firms financed under the program are in fact start-ups who might clearly not be able to achieve this level of financing outside the program.
Owners of the business must have a respectable personal credit history and be up to date in their personal tax filings. Doesn’t it make sense that you might not get a government loan if you have tax arrears? We certainly think so.
Documentation for the Small Business Loan
It might be easy to feel overwhelmed on the documentation required for the loan - that should not necessarily be the case - You should have a business plan or executive summary of the business, one that includes financial projections - Additional back up info would include your personal net worth statement
Presenting Your SBL Loan Package:
It might come as a surprise to many business people that no interaction with the government is required under the program. That is because Industry Canada works with your local bank who adjudicates applications for the loan.
At 7 Park Avenue Financial many clients searching for government-guaranteed loans tell us they can't find bankers who are familiar or comfortable with the program.
Recommendation:
Speak to a trusted Canadian business financing advisor with a track record of business finance success in the program
Presenting Your Loan Package
Be prepared to discuss typical questions that might come up under any loan for business - that includes the use of proceeds of the loan, your relevant business background and experience, etc.
It's simply a case of presenting your package in person, and answering the typical questions that might come up on your business, the use of the proceeds, and your own business background and experience. Here again, a trusted business advisor can do this for you and with you.
Approval Under Government Loans:
All invoices you submit under the program are paid by the bank and are paid up to 90% of the face amount of the invoice - Your contribution to the program is the balance of 10%. That ten percent is your 'equity' component of the program. The government, aka Industry Canada, guarantees the bank the majority of the loan.
Hundreds of millions of dollars of loans are advanced annually under the program, for pretty well every industry in Canada. By the way, franchises are a huge component of the program in our experience.
Approval
The program pays 90% of all invoices you submit within your approved balance. You are responsible for the other 10%, that is your equity commitment to the loan. Quite modest we think. And, do you want to hear some more good news; you aren’t even required to guarantee the full balance of the loan.
If you are looking to take advantage of the solid rates, terms, and flexibility of the Government Guaranteed Loan speak to a business financing expert who can help you navigate the program in the least amount of time - allowing you to start, run, or grow your business.
Stan Prokop
