Small Business Financing Loan SBL Loans 7 Park Avenue Financial

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Will The Small Business Financing Loan Still Work ? The Status Of SBL Loans In Canada
How Will Changes In The SBL Loan Program Affect Canadian Business Financing



Government Of Canada Small Business Loans

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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 under Industry Canada's Small Business Financing Act.


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 2% over prime and the scuttlebutt seems to be that the loan pricing might increase, but nevertheless still very competitive.  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. There is also a nominal registration fee for the loan, which can be added to the total loan amount.


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 small businesses / 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 $1,000,000.00 with some conditions - At 7 Park Avenue Financial, our experience is that most loans we originate under the program are in the 350k range. The most typical amortization or ‘loan term’ that we seek and recommend for our own clients tends to be 5 years. The loan can be repaid on a fixed rate or variable rate basis - Today's current low-interest-rate environment is very attractive to commercial borrowers. We prepare business plans for our clients, which are a requirement under the program, and our plans meet and exceed lender requirements.


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 the difference! So whets our point here - let's 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 ' by the financial institution administering the loan paperwork.


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 / equipment

leasehold improvements

real estate


The loan is not a cash flow loan, working capital loan , or a line of credit which are often misunderstood points when clients at 7 Park Avenue Financial ask for clarifications of the loan. On occasion, other information required may apply.


The bottom line? We think the Small Business Financing Program, on balance, is still a great deal for those firms that have less than 10  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 and many franchise loans are accomplished via the program.



Click here for the business finance track record of 7 Park Avenue Financial

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P.S. The program is perfectly suited for the franchise industry also and many franchise loans are accomplished via the program.

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Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil