Free consult & free copy of book

E-Myth – “Why most small businesses don’t work & what to do about it”

Contact Us


Most 5 star CPA Google reviews in Canada

Read Reviews

Chartered Professional Accountants E Myth

1 Fixed Monthly Fee - Planning | Accounting | Taxes | Consulting

Helping Canadian businesses beat the odds!

Virtual Accountant | Do Entrepreneurs Have Options On Financing

Business owners who have been rejected by their banks when they apply for loans may not realize that they have options on obtaining financing says virtual accountants. This is important, because many business owners should utilize financing to purchase assets whenever possible, so that they can keep cash in their business to utilize is operating capital. The Canada small business financing program can help business owners to secure loans when they have been rejected by other sources. The reason for this, is because the federal government is the guarantor for the loan. There are several things that business owners should know about the Canada small business financing program their thinking about using it.

Business owners should understand who can qualify for loans under this program? Virtually accountant says that small businesses who is dollars revenue per year can this loan. There is a wide threshold of businesses that can qualify and thatís done on purpose. The advantage of the loan, is that the federal government is guaranteeing the loan, therefore banks that had previously turns down business owners for loans, they now say yes to them because of the guarantee from the government. This can be great news for businesses to need to find more risk projects, or if business owners donít have as much credit history in their business.

Business owners also need to understand what the main disadvantage of Canada small business financing loan from the perspective of the bank is. virtual accountant says that the banks often feel that there is a huge amount of paperwork that goes along with this loan. Banks have to create with the federal government, go outside their typical processes, and take an extra long time in order to qualify and process the loan. Because of that, virtually accountant recommends that business owners approach small credit unions or small banks in order to be more likely to get approved. In Alberta, that means service credit union or ATB are great options to approach.

Business owners should also understand what they can get approved for, and what they canít. Websites, advertising marketing, payroll and operating capital are things that are not allowed to be funded utilizing the Canada small business financing loan. However, what can be financed says virtually accountant is hard assets such as equipment or vehicles, lease holder improvements, land as long as land is used in an active business. For example not purchasing rental properties or a business ownerís home. Businesses can obtain up to $350,000 for asset purchases, or up to $1 million for a combination of assets and real estate.

Businesses that are thinking of applying for this loan should also take into consideration there will be interest on top of the loan, and the loan application fee. The interest is a great midrange commercial loan rate at prime plus 3%. The application fee is a one time fee of 2% in the first year. Business owners should work closely with their virtual accountant in order to find out if this is a great option for them, and to create the application

Since running out of cash is the second most common reason that business owners fail, entrepreneurs should be mindful of that as they operate their business says virtual accountant. A great strategy that many business owners can use in order to increase the cash flow in their business, is to obtain financing on asset purchases whenever possible. If business owners do that, then they are able to keep the cash have their business in their business and use it as operating capital. This is extremely important because business owners are less likely to be able to get loans on operating capital, therefore any financing for assets will allow them to keep the cash that they have in their business.

The biggest problem with this strategy, is that business owners often have a hard time qualifying for loans once they own their business for certain period of time. This can help Business owners who have been turned down by traditional banks for loans, get approval. The biggest reasons why this program is an option, is because it is being backed by the federal government. Banks that have otherwise said no, might change their mind if they know that the federal government is acting as the guarantor.

In order for business owner to apply for this loan, best practices is to hire a virtual accountant in order to create a business plan. The business plan will help the business owner not only qualify for the loan, but it will also help a business owner create a plan and adhere to it about how to pay the loan back once they get approved for it. Creating a formal plan is a business ownerís best chance at succeeding in qualifying for the loan.

Business owners can get up to $1 million in order to fund real estate purchases, as long as the real estate is being used active business, or real estate purchases and hard assets. If business owners donít want to purchase will stay, they can access up to $350,000 for hard assets as well as leaseholder improvements for their business. What this means says virtual accountant is there are certain things that cannot be financed this way, most significantly operating capital, payroll, website development and advertising and marketing.

Even though the government is backing this loan, it does not mean that it is a risk-free loan. The bank is still allowed to request a security on this loan in any amount they want. You may ask business owners to sign a personal guarantee on the entire amount of the loan. This can help the banks feel secure that theyíre going to get that money back no matter what.

By understanding what all their options are, business owners can utilize the Canada small business financing loan in order to help them increase the cash flow in their business and stay viable.