Virtual Accountant | How Can Small Businesses Qualify For Loans

Entrepreneurs should consult their virtual accountant in order to find what all of their options are. A very little-known program that can be significant for many small businesses is the Canada small business financing program. This is a federal government back the loan that can qualify small businesses that make less than $10 million in revenue each year up to $1 million in a loan. But consulting with their virtuals accountant, business owners can find out if this is a program that can significantly help them grow their business.

One of the first things that business owners should understand are the advantages and disadvantages of this program. Virtuals accountant says that since the federal government is guaranteeing the loan, it can be much easier for entrepreneurs to qualify for this loan. The downside to this is large banks may not be interested in helping business owners obtain this loan because thereís a significant amount of paperwork. Also this type of work often goes outside their typical processes, takes them more time than normal to go through the loan process, or force them to coordinate with the federal government. While large banks canít out right refuse this loan, they can do is ask for security that is extremely high, which may cause a business owner to not want to risk their assets on a loan like this.

Even though this can give business owners up to $1 million, business owners should check with their virtual accountant in order to verify what types of things are allowed to be financed with this loan, and what cannot be. This loan can give entrepreneurs up to $350,000 in financing towards hard assets or leaseholder improvements. Or it can give them up to $1 million in financing to be used towards real estate or a combination of real estate and assets. What cannot be financed is

It can be extremely important for entrepreneurs to qualify for loans in order to help their business continued to grow says virtual accountant. However, businesses may no longer qualify for loans from regular banks, due to a variety of reasons. Since business owners are more likely to run into cash flow issues in their business the longer they own them, a business owner that has been in operation for a few years, they often get turned down by banks for loans. This doesnít mean that an entrepreneur has no options, it means that they need to explore options outside of traditional banks.

If entrepreneurs can consult with their virtuals accountant, they may discover a program called the Canada small business financing program. What this is, is a loan that is effectively guaranteed by the federal government that can help small businesses that make under $10 million in revenue each year. This program has the ability to grant small businesses up to $350,000 for hard assets and leaseholder improvements, or up to $1 million for real estate, or combination of real estate and hard assets. This may help business owners who need to borrow money in order to grow their business.

There are several things that entrepreneurs should keep in mind when they are applying for this loan, and one of the most important things they should remember is that before they apply for any loan, they should work with their virtual accountant in order to create a business plan. Not only is a business plan going to help a business owner qualify for a loan, they can help them be prepared to pay it back once they have been approved for it. Getting a formal plan in place is the best chance of succeeding in being approved for a loan, regardless of if itís from a traditional bank, or a government loan agency.

Despite the fact that this is a government loan, business owners still have to pay interest and loan application fees. Itís not the lowest interest loan that business owners can get, but itís also not the highest. Virtual accountant says that business owners should expect to see a set rate for this loan that is prime plus 3%. What business owners should also expect, is that there will also be an application fee of 2% which is a one time fee only and it will be applied in their first year.

Itís also important to note that this is not necessarily a risk-free loan either. Banks can still request security on the loan, up to the entire amount and including a personal guarantee from the entrepreneur. This means that if the business owner defaults, the bank may go after the business owner, their assets or request the money back from the government.

By understanding what all the options are for small businesses, entrepreneurs who are having trouble securing financing traditionally, can often utilize the Canada small business financing program to help them utilize the money that they needed in order to grow their business.