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 | Increasing Cash Flow Through Non Traditional Financing

Half of all entrepreneurs end up closing their business within 5 Years in Canada says virtual accountant, 23% said that they couldnít find the right team, 29% of business owners said they ran out of money and 42% said they couldnít attract the right customers. Since running out of money is a significant business challenge, entrepreneurs should learn how to use debt is a powerful tool as discussed by Robert Kiyosaki in his book Rich dad poor dad: ìGood debt is a powerful tool, but bad debt can kill you.î The way entrepreneurs can utilize this method, is by applying for financing any time they need to make an asset purchase, even if they have the money in their bank account. The reason why they would do this, is to keep the cash in their bank account and then use that as operating capital. Itís far easier for entrepreneurs to qualify for loans for assets than it is to qualify for loans for operating capital. If business owners use all of the money in their business to buy assets, later on when they run out of money in their business, are not able to secure a loan to operate their business with, and they have all of the assets that they need to so they canít qualify for more financing.

One of the setbacks that many entrepreneurs have to utilizing this method, is that they can no longer qualify for loans in their business at all. This is why business owners should work with the virtual accountant, in order to explore all of the options that are available to them. Options such as the Canada small business financing program. This is a program that has been put together by the federal government, that essentially has the federal government acting as the guarantor for businesses loan. All small businesses that make less than $10 million in revenue a year can qualify to put in a loan request under this program.

Business owners may wonder how much they can get financed for under this program, and if they are financing hard assets or leaseholder improvements only, they can get up to $350,000. If they are purchasing real estate, or real estate and assets in leaseholder improvements, they can be qualified to get up to $1 million. Business owners should work with their virtual accountant to figure out exactly how much they should apply for, and what makes a need.

Business owners need to understand however that despite the fact that this federal government program, that does not mean that it does not come without risks. Banks can still ask entrepreneurs to put security down on this loan, which could be a personal guarantee for the entire amount of the loan. This means that if a business owner defaults on the loan, they still may be on the hook for us.

Business owners also probably want to know what they cannot get financed for. Entrepreneurs cannot use this loan in order to fund operating capital, paying their payroll, developing websites or utilizing it for advertising or marketing to name a few.

Since cash flow issues such a problem for entrepreneurs in Canada today, virtual accountant says business owners need to learn how to increase cash flow in their business as quickly as possible, in order to succeed. A great method, is utilizing financing to increase the cash that they have in their business. How an entrepreneur can do that, is any time they need to purchase assets, whether they have the cash in their business for 10 or not, they should finance it. This way, keep the cash that they have on hand in their business, and use it as operating capital. The reason they should do this, is because itís far easier to qualify loans for assets than it is for operating capital. By using financing as a tool, business owners can ensure that they keep the cash in their business. Since cash flow problems is the second most common reason for business in Canada to fail, extremely important that business owners learn this as quickly as possible.

One way that business owners can utilize this method is by tapping into programs such as the Canada small business financing program. This is a program that has been developed by the federal government to help small businesses get loans by acting as the guarantor. Businesses that have been denied loans by their banks before, often can qualify for loans with this program. All you have to do is work with their virtual accountant, and create a business plan that can help increase their chances of succeeding before they put in their application. In addition to having a business plan to help them qualify for the loan, they can also help a business owner understand what the plan is to pay back

Business owners should also work with their virtuals accountant in order to figure out what the best financial institution to take their loan application to. The reason is because large banks often arenít interested in working with businesses on this loan, because they have to coordinate with the federal government, we have a lot more paperwork that we have to do, and that it often requires them working outside the typical work that they do in their business. Because of that, business owners can approach smaller banks, because they are less likely stringent in working outside date. Small banks and credit unions are the most likely to work with businesses on this type of loan.

Business owners should next understand what they can apply for. They can apply for hard assets such as vehicles and equipment, leaseholder improvements or real estate. They are not able to be financed for operating capital, paying their payroll, advertising purposes or creating websites. I understanding that there is a limitation on with the get financed for, business owners can decide with their virtual accountant if this loan makes sense to apply for.