We’re talking about the gap today. It’s the gap that is the bridge between a Canadian government business loan and the traditional banking term loan. So how does SBL financing help you or your firm bridge that gap. Lets examine.
So what’s the ‘ scoop ‘ on SBL loans? They are term loans from your bank with Industry Canada, i.e. the federal government guaranteeing 90% of the loan.
So whats the goodness in all of that? Simply that it is a great financing vehicle for start ups, small, and medium sized businesses who are looking for loans they will repay from future cash flow that they might otherwise not be able to obtain from the traditional Canadian chartered banking system. Additionally they might not have the collateral to collateralize the loan in a manner that most banks require.
It’s prudent at this time to recap what mainstream chartered banks in Canada require for this same type of financing. Typically a company such as your will be required to have substantial equity in your company or the transaction in question.
Banks in Canada are very focused on what commercial lenders call the 3 Cs of lending. Those 3 C’s are the banks interpretation of your character, your company’s capacity to borrow ( i.e. repay!), and the quality of collateral you can offer up, The bottom line all that then … the bank must feel comfortable with your business – its sales, cash flows, and any external issues relating to the current economy, your particular industry, etc.
So that brings us back to ‘ the great divide ‘. Its the gap that the government business loan delivers on Canadian business financing for those firms that can’t meet the requirements of Canadian business banking in the traditional manner we think of.
Don’t forget also that bank loans come with commitment fees, prepayment penalties, covenants, and extreme default measures when things go awry.
So we have come full circle to a proposed solid alternative, SBL financing, thats ‘SBL ‘ as being the acronym for what most people call the ‘ government business loan ‘.
How does it fill the gap then? It sure is obvious to us. It allows you to repay a loan out of projected cash flow when historical cash flows are insufficient or simply not available. That’s because thousands (yes thousands) of firms that utilize the program are in fact start ups, pre-revenue firms that are looking to build and grow a business.
In many cases the assets of the business otherwise would not allow you to complete a financing.
Is there enough money go around in the program? Thats a typical client question. The answer is a resounding yes! In 2010 alone over 7000 businesses borrowed billions under the program. And yes, that’s billions with a ‘ B’.
Uses of the program are equipment financing, leasehold financing, computer and software financing, and even real estate.
The cost of the program is very appealing to business owners in Canada. Rates are competitive, there is no prepayment penalty, and even the owners personal guarantee is limited to 25% of the loan. Try and get that deal under more traditional financing – we bet you will find it difficult!
Is it challenging to acquire such a loan? Not if you understand the requirements and create a streamlined process and follow documentation and application details properly and efficiently.
Speak to a trusted credible and experienced Canadian business financing advisor today on Canadian SBL financing. Bridge the gap!