Government business loans in Canada! You can pretty well guess or imagine that is one of the first questions we always get from a client is – am I eligible? So, are you SBL (Small business loan) worthy? Lets examine the facts.
First of all one should be commended for looking into and exploring the program, because via Industry Canada the SBL Loan in Canada helps many thousands of businesses every year .
As we have said in the past we dont necessarily think that the 350k loan cap on the program is that ‘ small ‘ either – although we’re pretty sure Warren Buffett isnt using the program . Actually he can’t, because of one the first eligibilities are that one has to be able to borrow legally in Canada via landed immigrant or citizenship status. So that quickly covers off one of our first eligibilities we guess.
There is both misinformation and misunderstanding around what your firm can borrow against under the program. To keep it simple the program is primarily used for equipment, leaseholds, and real estate. That equipment by the way can in fact include technology and application software, which are often components of many clients borrowing under the BIL loan.
That kind of brings one around to what can’t be financed under the program. So its very important to clarify that the loan is not a cash term loan, it cannot finance working capital components such as receivables and inventory, and it cannot finance goodwill. Having said that though we remind clients that the program can be an excellent tool for acquiring a company if the firm being purchase has assets.
There is perhaps the perception by some out there that this is an ‘easy money’ program. While in fact it offers excellent rates, terms and structures it is important to point out that to be eligible you have to demonstrate a minimum of 10% permanent equity or down payment and the owner or owners of the firm must have a reasonable personal credit history.
The good news though that while it is very difficult for start ups to get initial financing for their business government business loans, aka the ‘ SBL / BIL ‘ are the perfect solution for a start up business that needs financing . That includes franchises by the way.
Suffice to say that you need a solid business plan and projection also, which can easily be prepared by a business advisor or accountant, etc – thats of course for those that might not be 100% comfortable in preparing such projections.
One of the great features of the program is the limited guarantee – you as a borrower are only required to guarantee 25% of the loan personally. That leads us also to clarify that you must be able to demonstrate that you have some personal assets to back up that 25% guarantee – Naturally thats the worst case scenario, so lets stay optimistic here, right?
So, are you SBL loan worthy? You just might be, so seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist your with your SBL business loan need .