One thing that most of us would surely agree on is arranging funds for the business. It is challenging because you need to sell a hypothetical scenario to someone and gain their trust. There can be a lot of factors that could go wrong against you while you are repaying your debts. Additionally, you need to pay interests which is entirely the investor’s discretion. So, the best solution is the Canada Small Business Financing Program.
For those who are unaware of this program; it is an initiative that let an eligible candidate get a loan amount to either open up a new business, maintain it, or expand the organization accordingly. In just over a decade, more than 63,000 small businesses have got the loans, and in total the amount is roughly $9.5 billion. So, in this article, we will explore the steps to get the loan. Also, we will discuss who is eligible for availing of the service.
What are the eligibility criteria?
There are two simple criteria that you should understand:
The business must be located in Canada, and the gross annual revenues should not exceed $10 million.
Any Charitable Institutions, Non-profit organizations, or Religious communities can’t avail this loan as there are separate plans for those activities.
What is the maximum amount you can ask as a loan?
The maximum borrowing amount should not exceed $1,000,000. Also, this is the same amount that one owner or business partner can avail for their business. There is one more criterion that you must follow – the equipment or asset-purchasing amount should not exceed $350,000.
What are the steps to apply for the loan?
Several financial institutions in the country make this program possible. However, they hold the discretionary power to approve or reject your loan proposal too. So, the first step is to talk to your bank. Although, you can also try the Caisse Populaire or Credit Union of Canada. Find the right personnel and explain your business strategy, as well as the contingency plan if things didn’t turn out as expected.
Then that same person will scrutinize your application minutely. As soon as your application gets accepted by the applied institution, you will get the requested amount to your current account. Remember the loan that you have received will get registered under the Innovation, Science and Economic Development Canada.
What are the loan terms?
While you are trying to process a loan, the investors will always look for collateral, which acts as a guaranty if in case you are unable to repay the principal amount. The rate of interest, be that fixed or variable, will not exceed more than 3%. Also, there is an additional registration fee that you must pay. It is 2% of the accepted loan amount.
The Canada Small Business Financing Program is an incredible initiative that a lot of small business heavily rely on. The formalities are not stretchy as well. So, it will not be troublesome if you submit relevant documents and if your need is genuine.