OVERVIEW – Information on recent (relatively !) changes in the government small business loan in Canada . Gov’t guaranteed loans provide solid business financing for thousands of businesses from start up to SME
The government small business loan has been, and continues to be a benchmark in start up and small business financing in Canada. Govt guaranteed business loans have had some changes, so it’s time to ‘ plug in ‘ to these changes and how they impact the financing benefits of this program. Let’s dig in.
Have you heard about those ‘ winds of change ‘ in ‘ SBL’ small business loans in Canada? The ‘ great ‘ news is that the fundamentals and purpose of the program clearly do not seem to have changed. That’s probably recognition by INDUSTRY CANADA (they sponsor and manage the program) that the SME COMMERCIAL FINANCE sector in Canada generates a huge portion of employment, revenues, and… oh yes ….taxes!
So for over 50 years the program has delivered solid financing for businesses in all industries. Fundamentals of the program include the opportunity to start, grow, and expand your company. In many cases these loans are a direct substitute that our clients would normally not be able to successfully receive under ‘ traditional ‘ bank financing criteria. Those criteria are all too well known to the entrepreneur who arrives ‘ plate in hand ‘ looking for business financing or expansion capital.
Those winds of change that have entered the program do not affect the basic fundamentals – financing is available for start ups or established businesses with less than 5 Million dollars in projected or actual revenues respectively .
Assets that can be financed include equipment that is either new or used, or leasehold improvements to leased / rented premises. It’s important for the business entrepreneur, financial manager to understand that those equipment categories are extremely broad. It includes rolling stock, such as trucks or other vehicles, computer, telecom, and application software, and even the ability to finance a franchise.
What can’t you finance under a government guaranteed SBL loan? That’s the painful news we often have to deliver to clients to have exhausted other financing options – that includes goodwill, credit lines, fees to purchase a franchise, or R & D costs in developing a product. ( Note – use the SR&ED program to finance and cash flow your research and development – these credits can be financed also ).
So what about those ‘ changes ‘ to the program? Although banks are chartered to fund and administer the program the bad news is that different banks tend to, by law, interpret the program differently.
Recent legislative changes to the program include the ability for fees to be charged by the bank, as well as personal guarantees to be required on a case by case basis. (Traditionally only 25% guarantees were required). We suppose those are the ‘ ugly ‘(as deemed by the borrower) portions of changes under the program.
If there’s a bottom line it’s certainly that most top experts agree that the Canada Small Business Loan program is still a clear winner for start up, franchise, and growth financing in the SME sector. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in obtaining govt backed loans that meet your requirements.
Author: Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
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