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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
Phone = 905 829 2653
Fax = 905 829 2653
Email = email@example.com
Heard the news? Those drums are rumbling in the distance. The small business financing loan, aka ' SBL LOANS ‘may be getting a bit more expensive. We're pretty old ourselves and we actually can't remember when there has been a change in pricing to the ' SBL ‘- Canada's revered government guaranteed loan.
Naturally the press and all the financial pundits (We suppose that includes us!) are weighing in on bank profits on this program, higher costs to the borrower, and the overall merits of the program.
Current interest rates under the program are 3% over prime and the scuttlebutt seems to be that the loan pricing might increase by 3/4 of 1%. It's probably just us because we ourselves don’t borrow a lot, but with rates an all time historic lows in Canada we're not quite sure everyone should be gnashing those teeth.
The program rate increase under this loan will supposedly over a multi year period cost borrowers hundreds of millions more. That math should be quite acceptable though, given the program puts out Billions of dollars every year in loans to the SME sector in Canada.
When we talk to our clients about the program we focus on common sense, so let’s look at a real world example. The current borrowing cap under the program is $350,000.00. The most typical amortization or ‘loan term’ that we seek and recommend for our own clients tends to be 5 years.
So SBL loans on a 5 year term, for 350k of financing would currently cost you: $ 6766/m0
Using the new proposed pricing the loan payment would be: $ 6889/mo
We’ll let you mull over difference ! So whets our point here - lets not beat around the bush. It's simply that if the SME sector in Canada can achieve financing at 3 3/4% over prime for equipment and leasehold financing they might not be able to achieve otherwise is that really a bad thing. Consider that the programs other features include:
A low personal guarantee
Repayable without penalty
Terms from 2-7 years
The ability to actually finance real estate under the program
A 10% only down payment /permanent equity requirement
Do we need to go on? We think you get the point, which is that at any interest rate SBL financing is a great deal when all terms and conditions are considered.
We hear often that the banks don’t make a lot of money on the program and that there is what one writer recently termed ' an administrative burden '.
So where does the business owner /manager fit in. They simply want access to financing that they might not otherwise be able to achieve. That's still a tough haul if you're a service business because the program only finances assets and leaseholds and real estate.
The bottom line? We think the Small Business Financing Loan, on balance, is still a great deal for those firms who have less than 5 Million dollars in annual or budgeted revenue, which is a qualifier under the program. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with SBL loans to start or grow your business.
P.S. The program is perfectly suited for the franchise industry also.
sbl loans small business financing loan