5 Questions – 5 Answers On The Canadian Government Loan Small Business Program – SBL Funding

The Canadian Small Business Loan Program, commonly called the SBL Loan provides funding for thousands (over 7000 firms in 2010) of Canadian businesses just like yours. The program has been in existence for many of years and yet still many Canadian business owners and financial managers like you still have sometimes not even heard of the program!

Contrary to popular opinion these loans do not require a tremendous amount of time or effort and you are not dealing with a faceless government employee, as some might think.

Industry Canada, which sponsors the program grants Canadian chartered banks the authority to underwrite and approve loans and financing under the program. If you qualify, and know what and how to do things, you can receive approval for the loan within 48 hours.

Given the current economic challenges in Canada it clearly is refreshing news that Canadian business owners, from start up to established firms can receive financing up to $ 500,000.00 under the program. The Canadian banks are chartered to look out for the programs interest of course, but at the end of the day don’t forget the main goal – facilitation your access to credit a capital that you might not otherwise secure.

There isn’t a day when we don’t receive questions from clients about the program, everything from basic questions to issues that confuse the Canadian business owner about the program. Lets over off 5 of those questions, then consider yourself well informed about the SBL small business government loan program, funding on great terms, for your company.

Question 1- What type of loan is available? The answer to that is pretty simply, the program covers financing for real estate, equipment, leaseholds, computer software. What it doesn’t cover, which is typically what many clients are looking for, is funding of operating assets such as cash, inventory, and receivables. These assets are used to expand your business and provide financing at rates, terms and structures you might likewise not be able to achieve. Don’t forget this includes start ups also!
Question # 2 – Qualifications. The qualifications are simple. Business owners must have a decent personal credit history, a business address or location, a down payment of minimum 10% on assets financed, and a business plan that makes sense. Certain financial ratios must work re debt and opening working capital.

Third Question – Down payment, equity. The basic story is that you must have a minimum of 10% down on all financings, but to satisfy some of the bank guidelines you must have anywhere from 30% down to ensure opening working capital and debt to equity make sense for the custodians of the program .. The bank.

Questions # 4 – The approval process! How does it work?? The bottom line is that it’s not as complicated as you think. This is a great time to work with an experienced business advisor on ensuring you have a crisp plan that satisfied the program basics. Some standard business documentation back up – articles of incorporation, cash flow, owner net worth statement, etc should allow you to ensure that an approval is received in a matter of days. Not exactly what you associate with a government program… right?!

Final question – How does the Small business government loan program, i.e. SBL funding differ from normal financing. Its simple, the government is guaranteeing a huge portion of the loan to your bank. No personal collateral is required, and unlike most Canadian financing your personal guarantee is limited to only 25% of your financing. Terms are anywhere up to 7 years, and rates are comparable to what the big boys get.

The bottom line, the SBL program is probably a lot more user friendly than you think. If you work with a trusted, credible and experienced Canadian business financing advisor you can use this financing to meet the growth needs of your business, from start up to established firm.