Small and medium sized firms, including start ups, are the recipients of the financial benefits of this program. It is very important to clarify our reference to 'medium size', since the cap for sales or projected sales is 5 Million dollars in revenue. That is to say the program only lends to firms with revenues under that amount.
Should your firm, or yourself as a new entrepreneur be looking at this financing. Clearly the lending criteria, as well as the overall rates, terms and structure of the government small business loan lend themselves for serious consideration. Rates are comparable to what larger Canadian corporations can achieve- and if you want the real kicker here it is - a personal guarantee by shareholders is required for only 25% of the entire loan value. That in itself is appealing to many entrepreneurs and business owners who do not wish to offer up full personal guarantees.
How much can I/we get? That's the very firms and very typical question that we are always asked. Well, here is where even more good news kicks in. Up until 2009 the cap on the program was $250,000.00. This amount was raised to $350,000 during the most recent economic recession. 350K continues to be the loan maximum - however for borrowers who wish to facilitate a real estate transaction using the program you can actually go to half a million dollars on the program.
Why isn't everyone or almost everyone taking advantage of the program? We can't offer up all the reasons, but some of the better published ones relate simply to the fact that most eligible recipients are not aware of the program! That's almost too unbelievable when you consider the very attractive rates structures and terms that we speak of.
Another typical belief is that while the Canada government small business loan is guaranteed by the federal government (the owner of the program is Industry Canada) the program itself is administered by the chartered banks in Canada. Many feel the banks have not done a great job in promoting the program, due in some part to staff training issues, as well as the paperwork admin, and reporting that banks have to undertake when they are asked to create such a loan on your behalf.
Could you use funds for land, equipment, vehicles, software, leasehold improvements? Those very specific items are what 99% of all government small business loans are utilized for.
It is important for borrowers to also investigate what the program can't be used to finance.
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