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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Phone = 905 829 2653
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The federal small business loan. When we think of the term ' shenanigans ' it conjures up images of fooling around. There are no shenanigans when it comes to the Canada ' SBL' loan. It's a straight forward program for Canadian firms, start up included, to get the financing they need to start/grow their business.
Is the program a great idea? We think so and here's why, so let's dig in.
For starters any connotation you have with grants or hand outs need to be dispelled right away. You don't have a ' right ' to receive approval for such financing, so it’s a bad idea if you think you are on the ' auto qualifies ' path. You are not.
What SBL loans are about is the fact that its a government guaranteed financing program that is the cornerstone of at least 7000-8000 businesses every year – for Billions ( yes that’s with a ‘ B’ ) . The government, under ' INDUSTRY CANADA ' guarantees the majority of your loan to Canada's chartered banks. The general theory around the federal small business loan is that the bank is making a loan under conditions they otherwise might not be able to make to Canadian businesses with revenues up to 5 Million $, which is the size cap for companies wishing to apply .
When you are approved for such an SBL loan financing its safe to assume you have a good deal. Why? Simply speaking rates, terms and structures are both attractive and competitive. Loan rates are 3% over prime, financing is repayable at any time without penalty, and the whole issue of personal guarantees is often allayed because of the need to provide only a 25% personal covenant for the loan. Those sorts of terms, especially when it comes to start ups, or franchises, are ultra attractive and simply not available with other more traditional loan financings.
So how does the bank, which administers the loan program for the government, assess credit criteria? As we said, there are no shenanigans here; it’s a very simple short list of criteria. Owners must have reasonable personal credit, they must be able to make a 10% permanent down payment (equity) contribution, and they must have a proper business location backed up by a premises lease.
By the way, the SBL program in Canada is really one of the only vehicles that allow you to finance leasehold improvements which typically are difficult to finance under normal circumstances.
You also must ensure you supply a business plan and cash flow projection that demonstrates your ability to repay the loan, which has a maximum borrowing of $ 350,000.00. Remember that the SBL lender, aka our Chartered banks are not equity players. They have no upside! They’re just happy that you can make the loan payments out of cash flow from profits.
Most Canadian business owners and managers never seem to feel that business borrowing is straightforward. In reality we agree its a bit of an art and science ... so seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your SBL small business loan needs .
federal small business loan sbl canada