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Small business loans Canada
Imagine you have just opened a new venture with a wonderful dream of expanding it. This will take a lot to do. It will require funds for the different aspects that need to be expanded. Cash flow is very important and starting anything new needs money. To get the funds that you need to cater for your small business needs, “small business loans Canada” features prominently among the searches of entrepreneurs.
Small business loans Canada and beyond involves some risk and hence results in more strict eligibility. You will need to gather important documents and other details for the loan application.
Small businesses in Canada are important to the Canadian economy but most times you find such businesses in a struggle to either get started or grow their businesses. The problem of limited cash flow and the stiff competition from the larger companies threatens to shove them out of business.
In Canada, there are different lenders that connect small businesses to the loans on the market.
Sites like lendingloop give businesses the ability to access finance for small business loans in Canada. Businesses can receive good rates for the loans that they take.
Such loan companies give flexible terms for businesses who need loans and technology has made it even more easier. Some have as simple as 4 steps to go through before getting the loan.
Their main aim is to help the business grow and due to that, they do not make their processes complex. It is much easier to get small business loans in Canada from private lenders than from the traditional institutions.
There is easy and instant approval for these loans and has thus made it popular among many entrepreneurs in Canada.
Criteria for being eligible for small business loans
– Credit Score
Small business loans for Canadian businesses ensure that your credit score is checked before any loan is approved to you. You will need to have a personal credit score of about 650 and above to qualify for the loans. The business credit report will also be requested to complete the loan application.
– How old the business has been in operation
To get small business loans Canada and elsewhere you will be asked one of the most frequent questions: how long you have been in business?. This is a requirement from the banks and other lenders so that they can know whether you will be capable of handling the loan they give to you or whether you qualify in the first place.
– Net operating income
The net operating income refers to the income or revenue from the property minus the operating expenses. Lenders require than your total income is 1.25 times higher than the expenses. When you income is lower, it may affect your ability to get small business loans.
– How do you intend to use your funds
This is by far one of the most important reasons why small businesses in Canada get loans. Lenders before granting the loan will find out exactly what you are going to use the funds for. If you took the loans for equipment financing for instance, you will strictly have to adhere to using the money to buy equipment. Small business loans in Canada are mainly for the purposes of supporting the operations of the business to prevent it from collapsing.
Some small businesses are known as start-ups
Startups are small and new businesses that are set up to provide services to people but one of their main challenges is to find the funds to finance their business plans. Now there are different options for startups looking for funding for their businesses but sometimes the main challenge is such businesses don’t have the revenue streams as yet. They may also not qualify in terms of how long they have been in business. With these loans, the business will still have to repay with the interest and the other fees over a period of time.
How to find the right loans for start-ups
To find the right match for startups you should consider factors such as the interest rate. If the interest rate is too high, you may end up paying a lot of money for a smaller loan that you took. You should also keep an eye on the eligibility criteria.
The eligibility criteria for different businesses differ and hence you would have to review it thoroughly before you find the loans that fits your needs. Finding the right loans for your start up also involves checking the turnaround time.
This determines how long it will take you to get the loan. The turnaround time if its too long can cause the business to make losses. If you realize you cannot wait for the elaborate processes to be over, you can consider other forms of credit for your business like personal loans.
Lastly, to get the right loans, start-ups should check on the collateral requirement.
The collateral can range from equipment or vehicles and the good news is you may not need to have collateral before seeking out for business loans. Some lenders are more concerned if the business is financially sound and whether you have cash flow.
After shopping around and comparing the requirements of lenders you can then make your decision.
Governments efforts to help provide small business loans in Canada
The government of Canada, has taken upon itself to help small businesses and start-ups to get loans from government. It has a program known as the Canada Small Business Financing Program(CSBFP) which has been in place since 1999.
The government is aware that if they do not help these small businesses to get running, the future of the economy will be at stake. It was therefore created to help ease the funding problems of small businesses.
In this programme, the government of Canada shares in the financial risk of the company. The small business also gets loans of up to $1 million that they have to repay. The fund scan be used to undertake expansion projects for the business.
To apply for these small business loans in Canada, you will have to go through the participating banks or credit union. You must also operate within Canada, provide products or services to Canadian customers, be a for-profit company and have not less than $10 million in revenue.
There are many sources of getting small business loans in Canada. Some include applying to Angel Investor Networks, asking from friends and family. Other sources of small business loans Canada include applying for micro loans for small businesses with Western Economic Diversification Canada if you are in Vancouver, Edmonton, Regina, Saskatoon, Winnipeg, Victoria area.
You can get small business loans from either banks or private lenders as well. With banks, when you lack excellent credit, your application may be rejected because they consider small businesses high risk investments.
Going to a private lender to seek for small business loans in Canada is different. These private lenders mainly offer Merchant Cash Advances (MCA) which are unsecured and doesn’t require high credit scores.
You will get a sum of money and then repay with your future sales that you make either daily or weekly till the amount is paid back in full. Many businesses who want MCA’s as a small business loan get them.
Disclaimer: All loans offered through this website are subject to credit and underwriting approval. AfterLoans.ca is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. You can borrow up to $20000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.