OVERVIEW – Information on government of Canada small business financing loans . This financing is very appropriate for start ups, franchising, buying a business , or for firms in the SME sector requiring equipment and leasehold capital
Canada Small Business Financing loans are government guaranteed loans that assist any Canadian business (including start ups and franchises) to acquire financing for equipment and leaseholds. For many owners/managers these loans, commonly called an ‘ SBL ‘ are a ‘ bridge ‘ to starting and or growing a company. Let’s dig in.
If there is one negative aspect to accessing SBL capital it’s the perception that many applicants have that the process is long and complicated. In fact that is not necessarily the case, but it certainly is if you are unprepared and don’t know who to talk to and work with.
Personal guarantees are part of any business financing in the SME sector. However the Govt small business loan requires only a 25% personal guarantee, which is much more attractive to most entrepreneurs. The caveat here is that the guarantee you do provide on the loan must be backed up with a reasonable personal credit score and some personal equity commensurate with the amount you are borrowing. Here things like ‘ home ownership ‘help out a lot.
The good news about the actual rates, structure, terms, and length (amortization) of the loan is that they are set by the government and are cast in stone, so to speak. So Canadian banks that offer the loan don’t have any flexibility in raising rates or changing credit enhancements. That being said though it’s our own experience that different banks have different attitudes toward the program, and it’s critical to find a banker that’s ‘ on side ‘ with this method of financing. (Sorry, we can’t provide names to protect the innocent – but call us!)
As we have inferred Canadian chartered banks run/administer the program for Industry Canada. So contrary to the belief of some, there is never any direct involvement with the government – they are simply sponsors and guarantors of the program. Each year in Canada approx 8000 businesses apply and are approved under the program – which lends anywhere up to $500,000.00 for each loan.
While many businesses in the SME (small to medium enterprise) sector mistakenly focus on accessing capital from personal resources, friends and family, angels/VC’s etc they more often than not find that there are significant negative aspects to those sources of capital. Canada small business financing government loans are often a more realistic fast track to capital.
When SBL loans arent feasible don’t forget that numerous other traditional and alternative financing vehicles are available to you – They include:
Working capital term loans
Non bank asset based business lines of credit
SR&ED Tax credit financing
Equipment Leasing/ Sale Leasebacks/Bridge Loans
For ‘ smart ‘ strategies to the ‘ bridge to somewhere’ as it relates to growing or starting a business seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with accessing the right capital at the right time.
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 CANADA SMALL BUSINESS LOAN FINANCING EXPERTISE
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