Virtual Accountant | Is The Canada Small Business Financing Loan A Good Option?
One of the most common reasons that businesses fail in Canada, is that they run out of cash in their business, virtual accountant says that 29% of all failed entrepreneurs list this is the reason why their business failed. Businesses should try to keep they cash in their business uses operating capital, and any time they have to purchase assets for their business, should try to utilize financing in order to get those assets. As Robert Kiyosaki, the author of Rich dad poor dad said in his book, ìgood debt is a powerful tool, but bad debt can kill you.î By utilizing financing whenever possible, business owners can keep the cash in their businesses operating capital, which can help them stay cash flow positive and avoid running out of money in their business.
One of the biggest problems with this method, is that as businesses operate, banks consider them a higher risk loan money to simply because as businesses operate, they run into cash crunches, which makes them less likely to be proved financing. However, businesses that work with a virtuals accountant may hear about a program that can help them if they have been turned down from traditional loans. The Canada small business financing program can be a great option for entrepreneurs who have been turned down for financing by their bank.
Businesses have a limit on what they can finance with this program, only being able to finance hard assets such as vehicles or equipment, leaseholder improvements and land, more specifically real estate that is to be used in an active business, not rental properties. This means several things cannot be financed such as payroll, operating capital, websites, or advertising or marketing. Virtual accountant can work with businesses to help them obtain the money, able to get up to $350,000 for assets or leaseholder improvements, or up to $1 million for real estate, or a combination of real estate and assets.
Entrepreneurs should understand however that even though this is a government back the loan, that doesnít mean it is a guaranteed acceptance. Business owners need to work with their virtuals accountant in order to come up with a business plan prior to applying for the loan. This will do is help a business owner qualify for the loan. Not only will creating a business plan help a business owner get the loan, and will help them have a plan in place for when and how they plan on paying it back. Business owners who formal business plan in place in their business prior to securing loan is a business owners best chance at succeeding.
Business owners who want to be able to use debt is a powerful tool can often apply for the Canada small business financing loan, which can help them get approved when traditional financing is not an option. Been working with their virtual accountant, business owners can get up to $350,000 for assets, which can significantly help them in their business.
A significant problem that many business owners face is after theyíve been operating their business for a while, they run out of cash says virtual accountant. They need operating capital, which is difficult to finance. This is the type of situation that business owners face, when they end up running out of money in their business. Running out of money is the second most common reason for entrepreneurs failing in business, with 29% of all entrepreneurs who fail to see it as their main reason for failure. With half of all entrepreneurs closing their doors within five years, itís a significant problem that business owners can learn to avoid, it can greatly increase their chances of succeeding in business.
Business owners may not realize that there are options once they have been turned down for financing by their bank, however the Canada small business financing program exists, it is designed for small businesses with less than $10 million in revenue per year. Virtuals accountant says the main advantage of this loan, is that since the federal government is backing the loan, banks are more apt to loan to business owners knowing that the federal government is guaranteed. This doesnít mean however that it is at risk free loan, banks still can request security for the loan, up to a personal guarantee on the entire amount. With the large banks are not happy with which the large amount of paperwork that is involved with obtaining a loan, and often have made their security so high that many business owners donít feel that itís worth it. Because of this, smaller banks are great option as they are willing to work with businesses to obtain this loan. In Alberta, banks like ATB or credit unions such as service can be an extremely good option.
Business owners can expect this loan to come with a midrange interest rate, which is a set rate of prime plus 3%, which currently is 6.5%. The rate will fluctuate as prime fluctuates in addition to that interest rate, there is also a 2% application fee that is applied in the first year of the loan. Business owners should work with their virtual accountant closely in order to decide if this is the option they should go with, in order to finance their assets so that they can keep their cash as operating capital in their business.
Business owners should also decide what they need to be financed, by discussing with their virtuals accountant, because not everything they may want to get financed for can be included in this loan. Hard assets, and leaseholder improvements can get loans up to $350,000, or if business owners are purchasing land, they can get a loan up to $1 million that includes land and assets as well.
When business owners wants to increase cash flow in their business by utilizing financing, the Canada small business financing program should be optionally discussed with their virtual accountant. While it might not be the solution for every business, should be considered so that business owners can do what they can to increase the cash flow in their business to increase their chances of success.