YOUR COMPANY IS LOOKING FOR A GOVERNMENT LOAN OPTION!
THE CANADA SMALL BUSINESS FINANCING PROGRAM
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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?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Business financing in Canada, perhaps unbelievable to some, can actually be achieved via government loans. SME financing can benefit from a great tool. The Canada Small Business Loan. How does this loan work, and unlike Vegas odds, it’s a sure thing if you meet certain clear criteria. Let's dig in.
THE CHALLENGE OF SME FUNDING
The challenge of new and smaller businesses in the SME sector in Canada revolves around the issue of raising capital. The BIL/CSBF program, which are the official acronyms of the SBL loan by the government of Canada, provides a method for our somewhat risk-averse banks to approve business financing for our needs.
How does the small business 'SBL loan' achieve this? It allows your firm to get financing for items such as leasehold improvements, typically not financeable with any other lender. Additionally, as we have hinted, our Canadian chartered commercial banks have some fundamental criteria for business lending.
WHAT IS THE APPROVAL CRITERIA FOR A GOVERNMENT GUARANTEED LOAN?
Those criteria are typically historical track records which must evidence profits, cash flows, tangible net worth, and owner solid personal credit history. Not every business and certainly not every new business can meet or exceed these criteria.
So, as we have hinted, if you're not eligible at the bank for equipment and leasehold improvements financing you are immediately eligible if you apply under the government guarantee that Ottawa provides to our banks through INDUSTRY CANADA, which sponsors and administers the program with the banks or a participating credit union as the administering financial institution. There is a nominal registration fee pertaining to the program. Business owners are always concerned about interest rates, and the interest rate on the program is very competitive and significantly lower than finance solutions in the alternative finance area.
THE TRACK RECORD ON CANADA SMALL BUSINESS FINANCING LOANS
In the last decades, or so over 1 Billion dollars of loans have been made to Canadian business.
What are then some of the basic criteria that doesn't make this a Vegas crapshoot?! They are not complicated. Your business must have annual or projected revenues less than 5 Million dollars, the owner /owners must have a reasonable personal credit history, and also must not be in default of any federal income taxes. It would be somewhat ironic for the government to guarantee a loan to a business owner who has not filed or has defaulted on income taxes owing.
WHAT DO GOVERNMENT LOANS FINANCE?
What else does the business owner need to know? A couple more basics include the fact that the loan limit is $350,000.00, and that the program only finances 3 asset classes:
EQUIPMENT
LEASEHOLD IMPROVEMENTS
REAL ESTATE
Research and development cannot be financed under the program, but the good news is that R&D financing can be also achieved under the SR&ED program. You can finance your SR&ED Credit separately. It's a great way to take advantage of government financial support for r&d.
THE GOVERNMENT LOANS IS NOT A CASH LOAN, LINE OF CREDIT, OR WORKING CAPITAL LOAN
It's therefore critical to understand that this is not a working capital loan, and does not operate as a line of credit. Simply speaking, it’s a term loan - A point misunderstood often by borrowers.
WHAT IS THE ' DOWN PAYMENT ' / ' OWNER EQUITY ' PART OF THE LOAN
Looking for more ' DECODING' of the program. Simply speaking you must have a minimum of 10% permanent equity or down payment on the financing provided, and you only have to provide a 25% personal guarantee on the total amount of the loan.
WHAT IS THE COST OF GOVERNMENT LOANS
Cost of financing? Loans are made at 3% over prime and come with fixed and variable options, and companies with less than 10 Million in revenue can apply.
CONCLUSION
Looking for assistance for Canadian companies in completing SME financing under the SBL government loans? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital needs. Unlike our Vegas scenario, the odds of being approved are significantly in your favour if you understand the program requirements.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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