When is it better to obtain a lease agreement verse a small business loan(aka Canadian sbl )?  I’d love to tell you there is one answer and finish this blog but that would be flat-out incorrect.  Below is a simple and important key points guide to make a comparative but, when you’re ready to invest in your business venture or just expand your existing one, call me with your scenario and I’ll answer you based on your needs.

Below are some requirements to ask yourself with helping to decide what type of financing is most suitable to you.

When considering an either-or-scenario for a canadian sbl or leasing a borrower needs to ask a few questions of their business.  For instance; Will my business require more than my home location to be successful?  If it does and you need an office/commercial environment you will likely need an SBL/CSBF.  If you only need a piece of equipment and you can run your business from home, likely the process of leasing will suffice.  That doesn’t mean though that the business will be profitable sooner, just that it starts sooner and that’s all.  BTW, lets not confuse leasehold improvements with leasing…they are not related at all.  Simply, leasing is regular payments made to use equipment that generates, typically, revenue for your business whereas leasehold improvements are regular payments made toward the hard costs invested in your place of business that you typically do not use directly to generate revenue.  Examples of leasehold improvements are the paint, plumbing and signage for the workplace your business operates out of.

The process for obtaining a Canadian SBL (CSBF/Canadian small business loan) requires the following:  Lenders do have varying degrees of requirements but below is typically what you’ll be required to answer to  when you walk in to your bank and speak to a business advisor on your own;

Let’s do a check list comparative, everyone likes this method of comparison and it’s easiest to identify.

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Business plans  can cost $500 or $50,000 for one of these depending on how sophisticated your plan is.  Your plan may require professional marketing services evaluating a market, its size and scope etc. that a banker will want to understand before he/she seriously considers the project.

Most banks want, clients coming in off the street, a minimum of 25% and up to 50% of your own skin in the business.  This is for a new start-up, not a franchise.   Some banks completely repel certain business industries (for example non-franchise restaurant) while others continue to lend to these same ones – just not a favourable business cycle for a specific industry to that bank.

We believe the risk should be carried by the business not your personal wealth you’ve worked so carefully to build and grow.  We aim to minimize your investment in the business while ensuring you have enough capital to weather normal business cycles, that’s our experience talking.  Trust only an advisor who has financed your type of project…sometimes multiple times too.  Find out what you really need to invest before calling your banker.  We have the best financing partners in industry, we are certain of that!