OVERVIEW – Information on the Canadian government guaranteed small business loans program . How can applicants achieve approval optimism and financing success ?
The government guaranteed small business loan program often brings a feeling of initial pessimism to many clients we meet and talk to. They construe ‘ govt ‘with thoughts of bureaucracy/paperwork and time expended … with no results. The reality? The program is very accessible and no gov’t involvement required. Let’s dig in.
If there is one ‘ great ‘ thing the Canadian government has done for the start up/small business sector it’s the gov’t guaranteed small business loan program – aka the ‘ SBL ‘ (Small Business Loan).
The reality – the program finances thousands of businesses each year, for billions of dollars in loan guarantees. And the best way to access the program? It’s done via a simple visit to your bank – but be forewarned that if you’re not prepared failure is somewhat guaranteed.
Recent changes to the program have been viewed as some pluses and minuses around the program that has been in place for many years. That includes personal guarantees, which were more ‘ limited ‘ than in the past. The good news continues around collateral – only what is being financed is really the key collateral for the loan – no home guarantees or outside collateral required.
The three parties to the Govt Business loan are your company, the bank that administers the program, and of course Industry Canada – the branch of the govt that guarantees the majority of the loan to the banks. Borrowers have no contact whatsoever with the ‘ govt’ – they should only know their loan is in the majority back stopped by the federal govt.
How then does the loan application process work You simply as a proprietor or owner of a legally incorporated business need to present a solid business plan, a reasonable cash flow forecast, and a ‘ needs ‘ list of amount financed and breakdown . Unfortunately many business applicants for the SBL misconstrue what the program finances – which is only two asset categories
The program does not refinance existing debt, and it covers no working capital requirements such as cash / ar finance, or the often sought after inventory financing. Those solutions can easily be covered off by various asset lending alternatives available.
Sloppy loan packages can pretty well guarantee a decline – so careful time and preparation around your business proposal, your background info, and personal financial details count. At a minimum you must have at lease 10% equity in the total financing required – although clearly more is better.
The program is fairly liberal on debt to equity and working capital ratios, which are often the key focus in the financial part of your proposal. And you can typically expect a final answer on your completed and proper applications within a few business days.
Govt guaranteed loans can also be used to buy an existing business – that might include a franchise also. Amortization terms are generous and can go as long as 7 years on a term loan basis.
If you’re focused on ‘ optimism ‘ around the government guaranteed small business loans program seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can prove to you the program was meant to help the entrepreneur.
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 :
7 PARK AVENUE FINANCIAL = CANADIAN
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