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Questions You Might Be Afraid to Ask About Government Small Business Loan in Canada
Government small business loans go by various names, we at 7 Park Avenue Financial call them ' SBL's, but whatever name you choose to call this financing it's critical that entrepreneurs consider this valuable financing when evaluating business finance alternatives to start a business, buy a business, purchase a franchise, etc . We're covering off some solid reasons to consider federal govt help when looking for funding . Let's dig in.
Government Small Business Loan for Better and Faster Business Financing
Government loansare a perfect finance solution for start ups or firms who have not been able to attract ' traditional ' financing . It's ironic that the Canadian banks are a part of this program, and play a key role in delivery of the financing.
Get Rid of Startup Financing Once and For All
The loans are used to complement the owners own equity investment into the transaction . One popular reason for the programs success is that no outside collateral is required to complete a financing. Most business folks know that traditional chartered bank financing will over require outside collateral, guarantees, covenants, etc.
Loan terms are another attractive part of the SBL process - they make great sense given that typical terms are 3-5 years for repayment . That allows owners to minimize cash outflow which is critical in a start up or new business phase.
Equipment and other business assets are typically the most used part of the program . The ability to purchase new or use assets and finance them in a manner that makes sense is key .
Combined with the owners contribution into the business - i.e. the ' down payment ' the longer amortization of government loans make solid business sense. In effect you are matching your cash outflows with the useful life of assets you purchase and use to run , and grow, the business.
Many clients we work with use the program to purchase a business - that can be a franchise or an independent private company . Existing franchises can also be finance, with the approval of the franchisor of course.
One critical piece of advise we discuss with clients is that fact that buying a business should typically be negotiated as an ' asset ' purchase, not a ' share ' purchase . If the business has assets the government loan program can finance them!
When buying and financing a business purchasers should be able to demonstrate they have solid business experience . While direct experience in the same industry is a help it is not necessarily required. Ensure you have a proper business plan that lays out the financials properly . We also remind clients that an often underutilized part of the program is its ability to finance a real estate purchase, also commercial mortgage financing can also be considered separately .
Any asset that has been purchased within the last 6 months can also be financed under the govt loan program . This is a classic replenishment of working capital. It may be required that an appraisal of an asset is required, but this helps both the lender and the business owner - we consider appraisals an investment relative to the minor cost relative to asset size.
Don't under estimate the power and flexibility of the Government of Canada guaranteed small business loan program . We mentioned earlier that the banks play a key role in the delivery of the program as they administer and fund the loans under the auspices of INDUSTRY CANADA , who is the sponsor of the program.
Speak to a trusted, credible and experienced Canadian business financing advisor on how you or your business can utilize this valuable Canadian business financing vehicle.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
