YOUR COMPANY IS LOOKING FOR GOV’T LOAN FINANCING – AKA
'SMALL BUSINESS GOVERNMENT LOANS!
A PERFECT SOLUTIONS 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?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
SBL Loans, aka the ' Federal Government Small Business Loan' program in Canada, can sometimes is the financing lifeline for the Canadian business owner - Startups included, by the way. Oh, and that includes potential franchisees in Canada's franchise industry also. Let's dig in.
THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM
It is no secret that many business owners and entrepreneurs are pointed to Industry Canada's CSBF program when they are looking for business funding. Although Canada's version of this popular U.S. program ( They call it ' SBA;) is somewhat limited in nature ( it finances only 3 asset categories - more about those later ), it's not hard to see the appeal of this method of financing a business, growing a business, and yes, even buying a business.
BENEFITS OF THE GOVERNMENT LOAN PROGRAM
The simple reason? Competitive and attractive interest rates, structures, and terms - simple as that. Business owners/entrepreneurs can be forgiven for thinking they have to deal with the ' government ' for this loan program. That's not the case, as that typically might conjure up visions of red tape, bureaucracy, etc.
The maximum loan amount is 1 Million dollars for the small business bank loan, under certain conditions, but typical loans are 350k
Note - there is a registration fee under the program, due only when funded, and can also be bundled into your loan amount. Amortizations of up to 10 years are available - although typical terms tend to be 2-5 years for the term loan amortization.
WHAT IS THE RELATIONSHIP BETWEEN THE BANK AND GOVERNMENT ON CANADIAN GOVERNMENT SBL LOANS
Instead, the government provides loan guarantees to our Canadian chartered banks, which effectively run and administer the program under govt guidelines. In effect, they promise to repay the large majority of the loan in the event of a default - not every client we speak to understand that sometimes. When it comes to low interest business loans for the SME sector in Canada this is by far the best program.
WHAT ASSET CATEGORIES DOE THE GOVERNMENT SBL LOAN FINANCE?
We spoke of the different asset categories of SBL loans that can be financed. Those 3 categories include:
Equipment (new or used)
Leasehold improvements
Real Estate - (Note: we believe very few real estate deals are accomplished via the SBL loan, but it’s certainly available)
THE SBL LOAN IS NOT A WORKING CAPITAL LOAN OR LINE OF CREDIT
The somewhat ' inconvenient ' truth about Govt small business loans in Canada is they can not be used for working capital and cash flow needs. That's a common misconception. So essentially, it's term debt vs. asset monetization strategies. Businesses of all credit quality can still access other cash flow needs via A/R financing, inventory finance, PO financing, etc.
3 KEY REQUIREMENTS WHEN APPLYING FOR THE SBL GOVERNMENT LOAN
So the $64,000 question? Do you qualify for an SBL loan?! Eligibility boils down to some fundamental issues:
1.You must be legally allowed to borrow in Canada - for example, Cdn citizen or landed immigrant status
2.You must have reasonably good credit and a reasonable net worth - By the way, no personal assets are collateralized under the loan - the only guarantee you provide is a' partial loan guarantee personally ' and a 'promise to pay ' via your business
3. How to apply for a government small business loan? Typical business packages we prepare for clients of the program include owner bio, business plan, cash flow forecast, and financing breakdown for the loan. 7 Park Avenue Financial business plans meet and exceed the requirements of bank and other commercial lenders
WHAT ARE SOME PROS AND CONS OF THE CANADA SMALL BUSINESS FINANCING PROGRAM
Are there disadvantages to the program? Most clients we speak to are concerned about timelines for approval - the truth is that a properly prepared and presented package can easily be approved in a few business days. You should be able to properly position that your net worth at least covers the portion of the loan that isn’t guaranteed to the bank from the government.
CONCLUSION
Bank loans for small businesses are a challenge - so our information on how to get a small business loan is valuable - In many cases that we have seen, clients have tried to align themselves with bankers that don’t fully understand or like the program. Nix those quickly and choose instead to work with 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor that can assist you with how the federal government Canadian small business financing loan program that works for your venture.
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Stan Prokop
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