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THE PERFECT LOAN FOR SMALL BUSINESSES IN CANADA
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario L6j 7j8
Struggling to fund your business vision? Discover how Government Small Business Loans can be your secret weapon for success.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Government Business Loans and working capital solutions – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Government Small Business Loans: Solutions
Government Business Loan Financing. In Canada? Yes, in Virginia, this funding support does exist, and between 7,000 and 8,000 Canadian companies take advantage of it annually as part of the government's effort to support businesses.
The federal government is crucial in offering small business loans, guaranteeing loans, and providing specific funding through regional development agencies to support local businesses and industries. Federal Crown Corporation BDC also offers government-funded financing.
So yes, it isn’t really the ‘secret government stuff’ you’ve been reading about in the papers these days - i.e. phone and internet privacy invasion, etc. It’s simply a solid way to put a start-up or growing business in the SME sector in Canada on excellent financial footing. Let’s dig in.
WHAT DO YOU NEED TO KNOW ABOUT THE CANADA SMALL BUSINESS FINANCING PROGRAM
So why don’t most business owners and managers know about how this program offers funding, which denotes our ‘ Secret’ status?
We think it’s because they believe anything related to the government loan involves complex qualifications, too much documentation, and difficulty in approvals.
However, the Canada Small Business Financing Program and various other funding programs, such as grants, loans, and tax credits, are designed to assist businesses of all sizes, including small businesses, non-profits, and research institutions. Our view - NOT THE CASE!
WHY ARE GOVERNMENT LOANS CONSIDERED DIFFICULT BY SO MANY SMALL BUSINESSES
Canadian government business loans, commonly known as ‘ SBL’s, are a great option when financing seems difficult.
The trick - understanding that you’re never; we repeat ‘ never ‘ dealing with the government.
You must locate a financial institution, Canadian chartered banker, or participating credit union that knows and understands the program.
Financial institutions are critical partners in the loan process, providing loans and resources to help business owners access funding and mentorship opportunities. We meet many clients who have struggled to find that one special banker who feels comfortable with the program.
And all they had to do was ask!
ELIMINATING THE GUESSWORK OUT OF THE GOVT GUARANTEED SMALL BUSINESS LOAN WITH FINANCIAL INSTITUTIONS
So, how do you take the guesswork out of govt business loans? It’s simpler than you think.
You need to understand how the loan works, what options are available regarding structure and type of assets financed (only THREE types of assets can be financed - equipment, leasehold improvements, and intangible assets) and working capital costs.
(No repayment penalty, minimal owner guarantees, etc)
SBL loans in Canada incent Canadian banks to lend to your firm. Why? The government guarantees a huge portion of the loan if it is properly administered and documented. So ‘private sector’ Canadian commercial chartered banks are now positioned to… you guessed it… LEND!
WHAT UPFRONT PROJECT COSTS CAN BE FINANCED UNDER THE PROGRAM
As stated earlier, only 3 asset categories are financeable under the program. They are:
Equipment / Technology for business expansion
Leaseholds
Intangible Assets
Real Estate - rarely used for this program - but it’s available.
SBL LOANS ARE NOT CASH LOANS OR WORKING CAPITAL LOANS OR LINES OF CREDIT
Contrary to popular belief (or wishful thinking?!), these are not cash loans or equity financing for Canadian businesses.
ARE YOU ELIGIBLE FOR A GOVERNMENT LOAN?
So, let’s talk about eligibility, repayment and structure, and, most importantly, the approval process.
You’re eligible for this program if your company, proprietorship, or partnership can legally borrow in Canada - i.e. Cdn citizens or landed immigrant status. You also must have a reasonable credit history personally as the owner, which is a criterion for almost all business borrowing in Canada. You also must have a premises lease that is consistent with the loan terms you request.
Large businesses with over 10 million dollars in sales revenues cannot borrow under the program.
Additionally, specific government funding sources to develop programs are available for small businesses in Northern Ontario, including provincial grants, loans, and support from two regional federal government development agencies.
BASIC LOAN STRUCTURE AND LOAN AMOUNT FOR GOVERNMENT LOANS
The basics of structure and repayment? Easy. 5-7 year terms, no prepayment penalty, an interest rate at 3% over prime, and 25% owner PG. (Personal Guarantee)
Additionally, the Canadian government offers no-interest loans for specific projects to transform and develop the local economy, particularly in sectors like manufacturing and green technology.
APPROVAL REQUIREMENTS
Finally, the approval process. Not what you think.
A simple business plan or exec summary, a cash flow forecast, background info on owners, decent credit history, some related business/mgmt experience, and the specific field in which a business operates can all influence approval.
7 Park Avenue Financial prepares business plans for our clients that meet and exceed the requirements of banks and commercial lenders.
Three uncommon takes on Government Small Business Loans:
- They can catalyze innovation in niche industries often overlooked by private investors.
- These loans may inadvertently create market inefficiencies by supporting businesses that might not be viable long-term.
- Government Small Business Loans could be leveraged for economic redistribution, targeting underserved communities and industries.
KEY TAKEAWAYS
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Eligibility requirements often include business size, industry, and financial history. Understanding these criteria is crucial for successful applications.
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Various loan types exist, including working capital loans, equipment financing, and expansion loans. Identifying the right type for your needs maximizes your chances of approval.
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Interest rates and repayment terms vary significantly between programs. Carefully comparing options ensures you select the most favourable financing solution for your business.
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Application processes typically involve detailed business plans and financial projections. Preparing comprehensive documentation increases the likelihood of loan approval.
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Many programs offer mentorship and business support alongside financing. Leveraging these additional resources can significantly enhance long-term business success.
CONCLUSION
Government Small Business Loans offer a critical financial springboard for Canadian entrepreneurs seeking to realize their business dreams.
We’re sure there are a lot of ‘government secrets’ these days. But the best-kept one is one you should know about—government business loan financing used by thousands of firms like yours to grow their businesses and increase revenues for their products and services.
These loans support economic development and tourism businesses, providing essential funding and resources.
Call 7 Park Avenue Financial, a [trusted, credible and experienced Canadian business financing advisor who can quickly clear up those questions.
FAQ
What are the main advantages of Government Small Business Loans for Canadian entrepreneurs?
Government Small Business Loans often offer lower interest rates, longer repayment terms, and more flexible eligibility criteria compared to traditional bank loans. They can provide crucial funding for startups and small businesses that might not qualify for conventional financing options.
How can Government Small Business Loans help my business expand?
These loans can provide the capital to purchase new equipment, hire additional staff, increase inventory, or expand your physical location. This influx of funds allows you to take advantage of growth opportunities that might otherwise be out of reach.
Are there any unique benefits to Government Small Business Loans beyond just financing?
Many government loan programs offer additional support services such as business mentorship, financial planning assistance, and networking opportunities. These resources can be invaluable for new entrepreneurs or those looking to scale their businesses.
Do Government Small Business Loans offer any tax advantages?
While the loans aren’t tax-deductible, the interest paid on these loans is typically considered a business expense and can be deducted from your taxable income. This can result in significant tax savings over the life of the loan.
Can Government Small Business Loans help improve my business’s creditworthiness?
Successfully obtaining and repaying a government small business loan can help establish or improve your business credit score. This can make it easier to secure additional financing and potentially lead to better terms with suppliers and other creditors.
What types of businesses are eligible for Government Small Business Loans?
Eligibility criteria vary by program but generally include business size, industry, years in operation, and financial history. Most programs cater to small and medium-sized enterprises across various sectors.
How long does the application process for Government Small Business Loans typically take?
The application timeline can range from a few weeks to several months, depending on the specific program and the completeness of your application. Some expedited programs may offer faster processing for urgent funding needs.
Are there limits to using the funds from a Government Small Business Loan?
While restrictions vary by program, most loans can be used for various business purposes, including working capital, equipment purchases, hiring staff, or expanding operations. However, some programs may have specific use requirements or restrictions.
What happens if I struggle to repay my Government Small Business Loan?
If you encounter difficulties repaying your loan, it’s crucial to communicate with your lender early. Many government programs offer flexibility, such as temporary payment deferrals or restructuring options, to help businesses during challenging times.
Do I need collateral to secure a Government Small Business Loan? Collateral requirements vary by program. Some loans may require business assets or personal guarantees, while others may offer unsecured options. It’s important to carefully review the terms of each loan program you’re considering.
What factors should I consider when choosing between Government Small Business Loan programs?
Consider the loan amount, interest rates, repayment terms, eligibility criteria, and any additional support services offered. Also, evaluate how well the program aligns with your business needs and long-term goals.
How can I improve my chances of approval for a Government Small Business Loan?
To increase your approval odds, ensure your business plan is comprehensive and well-researched, maintain accurate financial records, improve your credit score if possible, and be prepared to clearly explain how the loan will benefit your business and contribute to its growth.
What are some common reasons why Government Small Business Loan applications get rejected?
Common reasons for rejection include incomplete applications, poor credit history, unrealistic business plans or financial projections, and not meeting specific program eligibility criteria. Understanding these potential pitfalls can help you better prepare your application.
