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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
Small businesses have always been an important part of any country’s economy. However, these businesses are faced with a bigger challenge when trying to secure financial assistance. Most small business owners are in need, at some point in the development of the business, of capital to finance their growth. Actually applying for, then getting approved for, a small business loan can be an extremely long, difficult, and sometimes discouraging process. Banks and other more traditional lending institutions aren’t always willing to lend to start-ups and smaller independent companies. This is why, as a small business owner you need to be prepared to face your potential lender.
By taking the appropriate steps to prepare in advance, small business owners can greatly increase their chances of securing the small business loan they need. If it is clear that you are in need of a loan, then you need to determine your eligibility for one. Most lenders look for the following:
More traditional lending institutions usually put great value on collateral. A secured business loan can provide you with the capital you need, typically it’s slightly easier to get a loan that’s back up by some type of collateral. Start-up or small businesses aren’t typically rich in assets hence you may need to use personal collateral like your house or vehicle to secure the loan you want.
This is the amount you are committing to your business. The more you inject, the more favourably potential lenders will look upon the loan request. Prospective lenders will look to ensure that you have invested a significant amount before they offer any additional financing.
Your business should have its own credit score and credit history, this will provide potential lenders with information on how well you can handle your company’s finances. If your company is still young and you haven’t had time to develop its own credit history potential lenders may want to look at your personal credit history and score.
One of the biggest factors lenders use when assessing your eligibility for a loan is your time in business. The longer you’ve been operating the more stable and attractive you’ll be as an applicant. In general, private or alternative lenders look for businesses that have been operating for at least a year, while traditional banks look for two years or more. If you’re a start-up with 3 months of business or more, you could qualify for a start-up loan.
Your cash flow will be measured using the forecast created in your business plan. Additionally, you need to be clear about the type of financing you need; whether it is equipment financing or working capital financing. You will also need to show exactly how you intend to use the requested funds and how much it is you need to achieve your targets. To increase your chances of securing a loan for small businesses you have to make a good impression to prospective lenders. This you can achieve by:
When you apply for a business loan, lenders will usually have a base annual revenue you must meet. In general, lenders require an annual revenue of $80,000 to $100,000 or a monthly revenue of $5,000 to 7,000 in card sales.
Traditional banks aren’t the only places to get small business loans. Some of the other small business loan sources where you can get the funding you need include:
The good thing about these other sources is that their qualification process is not as rigorous as that of traditional banks, and they are flexible in terms and schedule of repayment.
Small businesses are considered higher risk borrowers, this may mean you’ll need to work a little harder to get the funding you need. Always make sure your business plan is in order and look for alternative lending options are those lenders are usually for willing to work with smaller businesses.
Make sure you avoid these common business loan application mistakes.
Amount | APR | Term (months) | ||
![]() | 1k-300k | Fee-Based: Starting at 9% | 12- 60 | Learn more |
![]() | 5k-300k | 8% – 29% | 6-18 | Learn more |
![]() | 1k-500k | +5.9% | 3-60 | Learn more |
![]() | Up to 300k | 8%-22% | 6-12 | Learn more |
![]() | 5k-500k | - | 6-18 | Learn more |
![]() | 100K + | 6.05% + | 60 | Learn more |
![]() | 5K-100k | 15%+ | 12-18 | Learn more |
When applying for a business loan you’ll need to provide certain information about your business and yourself. If you apply with a bank, you’ll likely be required to set an in-person appointment to fill out the application, however, if you apply with an alternative lender, you’ll likely be able to fill out the application online.
The 3 main financial statements all business owners should understand.
In order to verify the information you provide in your application, some lenders will require you to provide certain documents.
Whether you own a start-up or an established business, there are business funding options for everyone. The first step, and arguably the most important, is to make sure you are prepared for the application process. Next, find a lender that meets your needs. This is where Loans Canada can help, we can match you with the right business lender in your area.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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