If you are either a start up (pre revenue) firm or an established small or medium (we’ll define medium a bit later) sized company in Canada you should be investigating, and using the Government of Canada small business loan program.
Why? We will give you 4 reasons – great terms, rates, structures and qualification criteria. Could you ask for anything better in Canadian business financing? We don’t think so and we have been a fan of the program now for years.
Many clients or callers requesting information on the program (the formal name is BIL / CSBF) often utilize the terms ‘grants’ when requesting info on the program. The BIL /CSBF program is not a grant. It is a special business financing program sponsored by Industry Canada (those good folks in Ottawa…). The program was developed by the government to assist the thousands of firms who might not qualify for what the finance folks call ‘traditional financing’ – aka “the bank!”.
We also promised you we would qualify the term ‘medium sized firm’ when it comes to qualifying for the program. In the case of the Small Business loan program any firm under 5 Million dollars in either actual or projected revenue still qualifies for the program. Naturally your firm has to be privately owned, and be considered a ‘for profit’ business. (We’re all ‘for profit’!)
As we said, many customers call looking for ‘grants’ – we’re all for free grant money also – we are sure it exists out there somewhere, we just have never found it. Actually, let’s clarify that, two great programs, S R ED, and film tax credits are non repayable credits you can easily apply for if you qualify for either of those credits. Those two programs are a discussion for another day though.
Typical client questions always include – how much can we get or apply for? What are the rates and terms? And what’s the process involved? Get ready for a short, simply and basic primer in all those three areas!
The Canada government small business loan has a maximum cap of 350,000.00 dollars. However, if you chose to use this financing for real estate you can actually receive 500k. We note that for many years the program had a cap of 250k and during the global recession (2008-2009) the government raised the limit on the program.
Many firms who are either new or have challenges might think the rates and structures are onerous under the program. Exactly the opposite… financing is at only 3% over prime, and from a term perspective you can go from 5-7 years, we typically structure 5 years as a reasonable term.
Penalties to pay back if you’re successful – There are none!
There isn’t a day when we don’t spend time advising clients on what can be financed under the program…that’s where a lot of mis-information exists. The program only covers equipment, leaseholds and real estate. We would add that software is included in the equipment category.
So who is using the program? Almost 8000 businesses did in 2010 – so you can be sure that the program works and is robust.
The greatest challenge around the program in our opinion has been the confusion on where and how to apply. We’ve completed transactions in a week and then heard from clients that they have spent months floundering on their processes in this type of financing. Speaking to a trusted, credible and experienced Canadian business financing advisor in the area of government small business loans will get you on the fast track to some of the best financing available in Canada today.
By: Stan Prokop
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Starting a business or expanding a current business can be expensive. There are grants and loans available for individuals allowing business expansion or development. The first though coming to the mind of most is going to a bank for a business loan when in reality; the government is the largest provider of grants to begin a small business.
Many big businesses got their start with a small government grant. There are grants available for expanding and improving as well as beginning a business. The Small Business Administration is a government mandated organization designed to assist small businesses with programs offering loan assistance.
Through the Small Business Admistration small business can apply for both long and short term loans to assist them with their business needs. There are four basic types of loans offered through them. A business loan guaranty program, the micro loan program, 504 certified development company business loan program and the small business investment company program.
Another option is to apply to various large corporations or foundations. Many of these corporations offer financial grants to small business owners. When a corporation provides a grant to a small business owner, they are able to use the money given as a large tax write off.
Australia has many private foundation and government grant programs available. When beginning a search for grants, private or government, be prepared for a large list of prospects. It is important to go through the ones appearing to suit your needs to determine their legitimacy. It the available grant appears to be legitimate and one that fits your criteria be prepared to provide a lot of information.
There are grants geared towards specific types of small businesses or minority grants such as for women starting a business. The majority of the foundations will want to know why you think you qualify, what type of business you have or want to have, and if there are other loans out for the business.
If there is a deadline specified for the grant application, get your information in before it ends. An application received after a deadline will not be reviewed. Any grant that applies to you and your business apply for it. There are grants for small sums of money as well as those for larger sums.
If you have not received any feedback for a larger sum, applying to numerous small amount grants could be just as beneficial to your business. Most corporations that offer grants have competition in their field. Find out who their competitors are and send a request even if they do not advertise the availability of a grant.
Your business will need marketing to survive. Searching, researching, and more researching grants are not only a way to fund your business, but is also marketing. When you contact a corporation regarding grants, it is a subtle way to promote your business and if you get a small grant in the process, better yet.
The best place to start researching is on the internet. Type in free government grants and then begin applying to each and every one of them that fit your business criteria.
By: Jeff L. McNamee
Category:
Business |
Tags:
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Micro Loan Program,
Minority Grants,
Private Foundation,
Short Term Loans,
Small Business Administration,
Small Business Admistration,
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Starting A Small Business,
Types Of Small Businesses
