Government Business Loan. In Canada? Yes, Virginia, it really does exist and anywhere between 7000 - 8000 Canadian companies a year take advantage of it. So yes, it isn't really the ' secret government stuff ' you've been reading about in the papers these days - i.e. phone and internet privacy invasion, etc. It's simply a solid way to put a start up or growing business in the SME sector in Canada on great financial footing. Let's dig in.!br>
So why don't the majority of business owners and managers know about this program, denoting our ' Secret " status? We think it's because they think that anything to do with the government involves complex qualifications, too much documentation, and difficulty in approvals. Our view - NOT THE CASE!
Government business loans, commonly known as ' SBL's, are a great option when financing seems difficult. The trick - understanding that you're never; we repeat ' never ' dealing with the government. You simply have to locate a Canadian chartered banker who knows and understand the program. We meet many clients who have suffered through finding that one special banker that feels very comfortable with the program. And all they had to do was ask!
So how do you take the guesswork out of govt business loans? It's simpler than you think. You need to understand how the loan works, what options are available re structure and type of assets financed ( only THREE types of assets can be financed - equipment and leasehold improvements ) and why this financing options matches even the financing that much larger corporations can't achieve . (No repayment penalty, minimal owner guarantees, etc)
SBL loans in Canada incent Canadian banks to lend to your firm. Why? The government guarantees a huge portion of the loan if it is properly administered and documented. So ' private sector ' Canadian commercial chartered banks are now in a position to... you guessed it... LEND!
As stated earlier, only 3 asset categories are financeable under the program. They are:
Real Estate - rarely used for this program - but it's available
Contrary to popular belief (or wishful thinking?!) these are not cash or working capital loans, or equity financing.
So let's talk about eligibility, repayment and structure, and, most importantly, the approval process.
You're eligible for this program if your company, proprietorship, or partnership is legally allowed to borrow in Canada - i.e. owners Cdn citizens, or landed immigrant status. You also must have a reasonable credit history personally as owner, which is in fact a criteria for almost all business borrowing in Canada. You also must have a premises lease that is consistent with the term of the loan you are requesting.
The basics on structure and repayment? Easy. 5-7 year terms, no repayment penalty, rates at 3% over prime, and 25% owner PG. (Personal Guarantee)
Finally, the approval process. Not what you think. A simple business plan or exec summary, a cash flow forecast, background info on owners, decent credit history, some related business/mgmt experience.
We're sure there are a lot of ' government secrets' these days. But the best kept one is one you should know about - Government business loan financing that's used by thousands of firms just like yours. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can clear up those questions in short order.
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Stan Prokop - founder of 7 Park Avenue Financial – www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact details :
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