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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The Problem
So the United States economy is struggling. Everyone is trying to figure out what will pull us out of the current recession.? In February 2009 U.S. Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA), also known as the stimulus bill. Its purpose was to provide a stimulus to the U.S. economy in the wake of the economic downturn. I don’t agree with everything our Congress and the Obama administration is doing. But I trust they are getting wise counsel. Hopefully people / advisors who are well versed in the field of economics. But we are sailing in uncharted territory. Academics won’t reveal the solution, only the tendencies and trends. Creativity applied to financial wisdom and judgment will bring about and / or accelerate our recovery.
At the business level, the struggle is similar. The business challenge is how to increase revenues and reduce costs. (The government is apparently not concerned with the cost reduction side. We already had a budget deficit before the stimulus bill.)? So what can companies do to survive? Marketing in uncertain times has to continue, so the business can be positioned and in the minds of its customers and clients when the recovery happens. Sales people have a unique challenge, when prospects and customers are dealing with tight and contracting budgets. The initial sale and the add-on sales is more difficult.
Who is Spending?
The one sector that is spending money is the federal government. Much of the money allocated in the Stimulus Bill / Recovery Act is targeted at governmental entities. So there is a layer of government involvement in between the money source and the business community and also individuals. Apart from the Recovery Act, the government has been and continues to provide money for many projects. The federal government buys just about every product and service. The military does the same. There is money for green initiatives. But how does the business community get access to this money and funding?
Businesses can get on GSA schedules to do business with the government. Some state and local governments are also making use of the pre-approved vendors on the federal GSA schedules. There are special programs and set asides for businesses which qualify for the 8(a) program or for those in minority owned, woman owned, veteran owned and small business categories.? To get access to this money and these contracts, the business must respond to requests for proposals and requests for quotations.
An Alternative
There is one more alternative: grants. For the most part these are for governments and non-profit organizations. But, there are instances where for-profit businesses can apply for and receive this free grant money.
By: Sandra Noble
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Crucial facts about grants and funding
Finding and identifying the numerous government agencies that give business start up grants for categorical reasons in specific subject areas needs time, effort, and research. Here is you may find a starting point for attempting to find it.
If you are trying to find funding for an existing or new for-profit business, you’ll find that it is more difficult in finding and getting grant funding. Government grants are usually (though not really always) given to non-profit associations for programs and services that benefit the community or the public as a group.
The first place that you must look for govt grants is the United Kingdom government web site. This site will help you to be in a position to electronically find and apply for the diverse different grant opportunities from all grant-making agencies.
You may also look for information on the different sorts of grants and the govt. agencies which make grants. Also, you can join receive instant notification of future grant opportunities in your mailbox. Domestic assistance (CFDA), which hosts a total listing of various Government grants and other types of help that is available.
Here’s where you can get information on grants by class and topic Area or you can search the catalogue by key words etc. If you find it simpler that way. If you find a particular grant that has interest for you, ensure that you carefully read the section on suitability Requirements to find out if you would be qualified to sign up for that particular grant.
You should also know that most regime grants are not available all year-round.
When an agency makes their money available for a grant, it usually puts an announcement in the Fed.
Grants that are offered to individuals are generally given to them for instructional support ( financial support ), the humanities, and diverse other types of research, though some agencies will give away grants to individuals for other purposes. You should not be conned by adverts and promotions that say you can get free cash just by writing a letter. There’s a lot of competition out there for grant funds. If you want to be successful in getting a grant, you must supply the funding agency with an excellent proposal that explains your objectives and also offers a plan and a comprehensive budget plan for your activities.
Grants are only free in that you do not have to repay the cash. However , if you are awarded a grant you may be required to provide progress reports, program analysis, and / or financial reports to the governing body agency that gives you the grant.
By: Teresa C MacArtur
