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 | Government Financing Programs?

Business owners often have to get creative when it comes to ensuring that their business has a positive cash flow says virtual accountant. A great strategy that business owners can utilize is financing asset purchases whenever possible. The reason why this works is because entrepreneurs get financing on asset purchases even if they have cash in their bank, so that they can use that cash as operating capital. The reason why this is so important is because itís far easier for businesses to get financing on assets been operating capital. As Robert Kiyosaki, author of Rich dad poor dad said, ìgood debt is a powerful tool, but bad debt can kill you.î By utilizing this strategy, business owners can use good debt in their business to ensure they donít run out of money.

Business owners who no longer be eligible for traditional loans, may believe that this strategy will no longer work for them, but if they work with their virtual accountant, they can discover the variety of non traditional loans that are available. The Canada small business financing program is a great federal government program that helps small businesses get approvals for loans. By acting as the guarantor, the federal government helps businesses qualify for loans that they might not be able to qualify for because of the security. This is a fantastic program that can be used by businesses who canít qualify for loans traditionally, because they have been business to long, they need to fund risky projects, or they donít have credit history in their business yet.

Just like most other loans, business owners should be proactive and create a business plan prior to applying. By working with their virtuals accountant, business owners can create a formal business plan that cannot only help them apply and qualify for a loan, but it can also help them have a plan in place for how to pay that loan back once they have been approved.

Just like any other loan, Canada small business financing loan has interest and application fees. The application fee is 2% and is a one time thing only to help assist in processing the loan in the first place. The loan interest amount is a set amount of prime plus 3%. Currently that brings the interest rate to 6.5%, which isnít the lowest rate business owners can get, but itís not high either. Virtual accountant says that this is a decent mid range commercial loan rate that business owners should be fairly pleased about.

Business owners may wonder the amount of money that they would be able to finance through this loan, and if they are applying for assets only, they can secure up to $350,000. If they are financing real estate purchase as well as assets, business owners can secure a loan for up to $1 million. They should strategize with their virtuals accountant in order to figure out what amount business owners should ask for and what they want to finance.

A common problem that many business owners face is running out of money in their business confirms virtual accountant. As business owners operate their business, they purchase assets, and gradually run out of money. One way that business owners can combat this problem, is by utilizing financing in order to increase the cash flow. The way that they would do that, is anytime they have an assets they needs to purchase, business owners should finance it, even if they have the money in their business to buy it outright. The reason why businesses would do this, is so that they can keep the cash in their business uses operating capital. Since itís far easier to qualify for loans for assets than it is for operating capital, business owners can use financing as a tool to get the assets while keeping cash flow positive in their business. Since 29% of all failed entrepreneurs say that cash flow was the reason why their business failed, this can significantly impact the success rate of entrepreneurs for the better.

The challenge to the strategy is that business owners often find that as they operate their business, their ability to qualify for loans starts to diminish. Once a business is no longer able to secure financing from their traditional bank, they may believe thatís the end of the strategy. But if they work with their virtual accountant, they can often come up with strategies on how to overcome this. By utilizing the Canada small business financing program, can help entrepreneurs qualify for loans when traditional financing is no longer an option. This program utilizes government backing to help guarantee loans for small businesses so that banks are more willing to loan to those businesses who have by the government.

Some banks see this is a disadvantage, because of the amount of paperwork involved in qualifying and processing this loan. Not only do banks have to coordinate with the federal government, they also often end up doing work that goes outside of the bankís usual processes, and takes significantly more time to qualify and process. By allowing their virtuals accountants to help them, entrepreneurs can approach banks that are more likely to accept this type of loan application such as credit unions small banks. In Alberta, a business ownerís best bet is to approach ATV or Servus credit union

Entrepreneurs need to know that there are some limitations to what can be financed through the Canada small business financing loan hard assets, leaseholds and land. This means businesses cannot use this financing in order to fund payroll, operating capital, or advertising and marketing such as websites. As long as a business owner can finance within those parameters, they can secure up to $350,000 for assets and leaseholder improvements, or up to $1 million for real estate, or a combination of assets and real estate. Entrepreneurs can work with their virtual accountant to come up with the right mix of what they want to fund and the right funding amount.