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GOVERNMENT OF CANADA SMALL BUSINESS LOANS ARE ACCESSIBLE TODAY!
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Government loans for business in Canada are getting a ' reboot' via some dramatic changes to the loan program. So SBL Canada (‘small business loan') financing requires some attention from the owner/entrepreneur seeking this type of financing. We’re covering off 7 ‘must-knows’. Let's dig in.
WHAT CAN BE FINANCED UNDER THE CSBFL PROGRAM - I.E. THE GOVERNMENT GUARANTEED LOAN
We'll step back a minute and recap the landscape for this type of finance. The program specifically is mandated under ' INDUSTRY CANADA',. While the loan has ' the feel ' of government financing, the reality is that the actual loan is approved, funded, and administered by our Canadian chartered banks. The three key asset categories are ' fixed assets,’ i.e. equipment and real estate, and 'leasehold/leasehold improvements
WHAT IS NOT FINANCED UNDER THE PROGRAM?
Therefore, the business owner needs to understand what the program does not finance, which is items such as inventory, working capital, intangibles, etc.
While the loan assumes you will have some money invested in the business, typically, this amount is much less than you would require in normal borrowing circumstances.
Simply speaking, the overall loan package must reflect some reasonable chances of the loans being repaid. That typically is achieved by a strong business plan that reflects some good owner business experience. 7 Park Avenue Financial business plans that we prepare for clients meet and exceed bank and lender requirements.
The program's true beauty also lies in the fact that no outside collateral is required under this method of financing. By the way, the current financing limit for the program is $350,000.00, although recent changes suggest higher financing amounts can be approved under the right criteria, such as 1 Million $ . New or existing business must have annual real or projected revenues under 10 Million $.
If there's one problem we have noted specifically with the program it's that each of the banks take a different stab at interpreting how they will run the program. While uniformity is desired, unfortunately, it doesn't exist. That's our story and we're sticking to it!
HOW TO APPLY FOR A GOVERNMENT SMALL BUSINESS LOAN
For true success in the program, it’s all about your loan package, and it’s absolutely not as onerous as you think. In fact, with the help of a trusted, credible and experienced Canadian business financing advisor, that package can be put together in a couple of days. Key elements of the package include owner bio and demonstrating a good personal credit history. Entrepreneurs who have been credit challenged in the past will have a major problem in getting approved. A good credit score, typically at least 600+ is required.
There is a one-time 2% registration fee that can be bundled into the loan amount. The current cap on revenue size is 10 Million dollars annually, so your firm is eligible if your sales are under that amount. Amortization terms can in some cases extend to ten years, particularly when real estate is financed.
The actual business plan or executive summary should profile the business and include a solid cash flow plan and revenue forecast. Supplemental info to help the loan get approved might be copies of any client contracts, your articles of incorporation (proprietorships are ok also), and a copy of your commercial premises lease. You also clearly want to demonstrate the use of the funds, which is typically done via invoices or quotes from your vendors/suppliers.
WHAT ARE 7 KEY REQUIREMENTS OF THE SBL LOAN PROGRAM WHEN YOU APPLY FOR THIS LOAN?
There you have it. A quick recap required?
1. Understand what the program is and is not
2. Ensure you know what the program actually finances
3. Know that 100% financing is not available under the SBL and that some owner equity will be required
4. Have a business plan or exec. Summary that highlights your loan request
5. Understand the application process
6. Consider using an experienced business advisor who can fast track your loan
7. Be able to demonstrate your experience and personal financial history
The Canada Small Business Financing Program allows businesses who otherwise might not be able to receive traditional bank financing access to funds for starting or growing a business. Thousands of firms are successful in obtaining billions of dollars of financing - let the 7 PARK AVENUE FINANCIAL team fast track your success under the program Getting 'on track' with SBL loans in Canada is a solid way to start and grow a business.
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