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What do I Need to Get a Small Business Loan in Canada? 2018-05-03 06:47:29 Akal Mortgages What do I Need to Get a Small Business Loan in Canada?

get a business loan online 1It’s no secret that Canadian businesses are an important part of the economy. However, many businesses and business owners face a number of challenges when it comes to securing a small business loan. During business development, business owners require working capital to finance business growth. Traditional bank loans can prove to be quite daunting and difficult to ascertain, especially if you’re a smaller independent company or a new start-up. Therefore, you need to be well prepared when it comes time to meet with your lender. 

By preparing well in advance, you will be able to increase your chances of securing the small business loan you require. Since you’ve probably already made the determination that you do in fact require a business loan, then you’ll also need to know what eligibility requirements you’ll have to meet. Here’s what most lenders are looking for:

Business Assets or Personal Collateral?

If you’re dealing with a bank, then you should know that they’ll place great value on the collateral you can offer up. However, if you have a smaller business or new start-up, you may not have the assets required and you’ll therefore have to utilize your personal assets, such as your home or vehicle in order to secure your business loan.

Your Commitment to Your Business 

Once lenders see that you are truly committed to and financially invested in your business, they look at you and your loan application a lot more favorably, increasing your chances for additional financing.

Your Business’s Credit Score & Credit History 

If your business is small or new it’s likely you haven’t had the necessary time to develop much, if any, credit history. This information is essential to any potential lenders because it illustrates how you manage your business finances. If your business has little or no credit history or score, be prepared to provide your personal credit history and/or score.

Your Cash Flow

Your business plan should include a forecast of your cash flow. It should also include clarity on the type of commercial mortgage financing you require, such as working capital or equipment financing. You also will need to include the details on your targets, how much you need to meet them, and how you plan to utilize the funds.

Ideally the main goal here is to make a good first impression with lenders. This can be easily accomplished by demonstrating that your business:

  • Has a good management team behind it

  • Has potential to grow steadily

  • Has the ability to be profitable, enabling you to repay the business loan easily, and affordably

  • Your intention for long-term financing, resulting in lower repayment costs and long-term investment funds 

Alternative Lending Sources

Whether the bank said “NO,” or you just want to avoid that road altogether, you should know there are many alternative lending options out there. Here are some alternate sources for securing a small business loan: 

  • Mortgage brokers. Mortgage brokers have a ton of resources when it comes to lenders for any financial situation. So, whether you’re a small business or a new business, it’s almost a guarantee that they can find a lender to match your needs.

  • Credit unions. In order to qualify for a business loan through a credit union you’ll likely need to sign up for membership. You’ll also need to have good credit history, a good credit score, collateral and a plan for your business. Credit unions aren’t as strict as banks either, but you need to meet all of the requirements.

  • Family and friends. Family and friends are always willing to stand behind you and your business, which makes them a great source for a potential business loan. 

With all of these alternative lending sources available to you, it can greatly simplify the process to qualify, when compared to any bank. They also create more flexibility for repayment and mortgage terms. By considering alternative lending options and being prepared ahead of time, you’ll easily find a lender that’s willing to work with you to provide you with the financing your business needs.

To get started with your small business loan today, speak to one of our mortgage agents.

When we say YES! We stand behind our promise. ®

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