For most aspiring business owners, financing their start-ups can be quite challenging. Some of these entrepreneurs may not have all the money they need to launch the business as it is always difficult to secure a loan for a new business. However, if you are a Canadian resident, this should not worry you as it is now possible to secure a loan for a small business, thanks to the Small Business Financing Program. It is a loan program that involves the government in collaboration with other financial institutions.
You are eligible to apply for a loan under this program if you have a start-up or a small business within Canada that is operating for profit. The business should have a gross annual revenue of ten million dollars or less. Eligible businesses include; sole proprietorships, partnerships, cooperatives or corporations. However, farming businesses are not normally eligible as there is a similar program under Agriculture and Agri-Food Canada which targets such businesses. Other organizations that are not eligible include NGOs, religious and charitable organizations.
It is upon the lender and the borrower to negotiate the right amount to finance the business. However, the maximum amount that one can access under the program is one million dollars. As a set rule, the amount used for purchasing or improving equipment should not exceed $ 350, 000. A registration fee of two percent of the total loan amount is normally charged and the interest rate can either be fixed or variable.
The Application Process
To apply for the loan, you need to present your application together with the business plan to a credit union, caisse populaire or a chartered bank. Note that the financial institution can deny or approve the loan depending on whether you have met the requirements or not. Moreover, Industry Canada is not involved in the processing of the loan application or in the decision making process as this is purely the responsibility of the financial institution.
Different institutions have different criteria for approving these loans and if your application is denied by one financial institution, you can always try others. This small business financing program has helped and continues to help start-ups and small business owners who would otherwise have no other option for financing their businesses.