Government Small Business Financing Loans In Canada : Safecracking The Federal Loan Program

Government small business financing loans in Canada are often disregarded by Canadian business owners/financial managers if only for the reason that they have decided that the application process is somewhat of a burden.

Federal govt ‘ guaranteed ‘ loans are probably the most basic form of business application , so lets examine who’s right and who is wrong on that belief – in effect we’re cracking the safe on this somewhat misunderstood financing . Let’s dig in.

In Canada there are various perceptions around business lending in the SME COMMERCIAL finance needs area. Those perceptions include the fact that even though the 2008-2009 recession is well over business credit is still tight.

There are various reasons why the Govt Business loan isn’t being pursued. The program itself is a term loan, not a revolving line of credit or cash as many may have been led to believe. That implies taking on debt, as well as knowing that your firm in fact qualifies. That, coupled with our premise that many business people feel the application process is cumbersome (Spoiler alert – It is not!) may be some of the reasons that the federal ‘ SBL ‘ loan isn’t access by more businesses.

Safe to say also that despite that fact that close to 8000 Canadian businesses every year qualify and are approved for billions of dollars some entrepreneurs/owners might feel that don’t qualify. We say entrepreneurs because thousands of start ups and franchises are financed under the program also.

Let’s dig into that ‘ application process’. Is it really as ‘ intimidating ‘ as some think? Hardly we maintain. The process includes some of the most standard documentation that anyone would expect in business credit. They include:

An executive summary or business plan around your business/project (This should include some financial projections that clearly reference how the loan will be repaid

Confirmation that the owner/owners have reasonable personal credit

Breakdown of uses of the financing (By the way the program only finances 3 asset categories – equipment, leasehold improvements, real estate)

Basic legal fundamentals around your business – i.e. incorporation details, business address,

We’re the first to agree that ‘ time is money ‘ so your ability to properly prepare and present your proposal is key. Although all Canadian chartered banks offer the program it’s critical to locate a supportive and knowledgeable banker.

Success in the government business loan allows owners/entrepreneurs to:

Start a business

Buy a business

Acquire a new/existing franchise

Grow a company

For those that would still maintain this excellent program is not for them numerous alternative financing solutions still exist – they include:

Receivable financing

Inventory Finance

SR&ED Financing

Asset based non-bank lines of credit

Equipment Leasing/ Sale Leasebacks

Whether you’re looking to reap the benefits of the federal Government small business loan finance program, or looking to investigate other financing options seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you ‘safe crack’ finance solutions you can trust.