Facts About SBL Government Small Business Loans In Canada.

Government small business loans in Canada. We’re talking about some straight facts around ‘ SBL ‘ financing in Canada. We all have heard the story: businesses in the SME sector account for huge portions of the Canadian economy in employment, revenue, and tax generation.

In Canada Industry Canada is the government department / organization that sponsors and administers the SBL program.

The SBL small business loans program allows for maximum financing of 500,000.00$, however that amount is limited to real estate only. The limit for financing of equipment and leasehold improvements maxes out at 350,000.00$.

The program sets a maximum interest rate of 3% over the bank prime rate. Unlike a similar program in the U.S. (In the U.S. it’s called the ‘SBA ‘) the SBL program does not cover cash loans, working capital, business lines of credit, etc. That’s a popular and unfortunate misconception when it comes to businesses that are looking for other types of financing.

One area of clarity that we explain to clients is that both corporations and individual business owners, i.e. a proprietorship, can be eligible for an SBL Loan.

Why are SBL loans so popular then? We’ll quickly add that they apply to any business that has real or projected revenues under 5 Million dollars annually. The popularity is derived from the simple fact that businesses in the SME sector traditionally have a tough time raising capital… of any kind!

Without strong financial statements or solid net worths and guarantees from the owners there is a real financing gap in Canada when it comes to term loans and access to capital .

In Canada the SBL program is administered, as we said, by INDUSTRY CANADA . But that is not your key contact for any loan application. It’s your bank, who administers the program on behalf of the government. This allows banks to provide a valuable dimension to business financing in Canada to the small business sector.

So what in fact are the requirements of the program? Essentially you need to present a sound and viable business plan that shows a reasonable expectation of profit and of course cash flow generation – which is of course what repays the loan.

The business owners provide a guarantee limited to 25% of the amount of the loan. That in itself is a great thing, given that the majority of business financing in Canada requires 100% owner guarantees. As a business owner applying for he SBL program you should be able to demonstrate a good personal credit history and we can only call a ‘ reasonable’ personal net worth. Things like being a homeowner and having some savings, etc certainly help the cause.

A couple key business ratios must be satisfied in your business plan and financial projects – they revolve around debt to equity and working capital calculations. Your business advisor or accountant can make sure these are properly presented.

Government Small business loans totaling the in billions are provided to almost 8000 businesses annually in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in finalizing your access to one of the best programs in Canada when it comes to finance for the small business sector.