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

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Virtual Accountant | Qualifying For Non Traditional Loans

Half of all entrepreneurs end up closing their business within five years, and 29% of those entrepreneurs say that the reason why they failed is because they ran out of cash in their business says virtual accountant. Many business owners fail to understand that debt can be a good thing. As Robert Kiyosaki has said in his book, Rich Dad Poor Dad ìgood debt is a powerful tool, but bad debt can kill you.î Business owners who understand that utilizing financing can help them avoid cash flow issues in their business as well as help them grow their business. Business owners who regard all debt is bad, miss out on important opportunities. When business owners can finance asset purchases, that frees up their cash in their business in order to use as operating capital. This way, business owners can use financing is a way of extending the amount of money they have at their disposal to help them grow their business.

The biggest problem with this is as businesses operate, they become less must able to secure financing through traditional methods, meaning they are less likely to use debt as a tool in their business. Business owners should consult with their virtual accountant, in order to find out if there are any non-traditional loans that they can access to help them grow their business. The Canada small business financing program can help small businesses secure loans because the federal government as the guarantor. Banks will be more likely to loan money to a business once they understand that the federal government is guaranteeing the amount. Not all businesses qualify to apply, they must be a small business, that makes under $10 million in revenue says virtuals accountant.

Many business owners assume that since this is a federal government backed loan, that it means that the loan is guaranteed and risk-free. That is far from the case says virtual accountant. They think still may request the security on the loan, including a personal guarantee, end up to and including the entire amount of the loan. This is definitely far from risk-free, any business owner that defaults, will be able to of the bank go after them for the amount they owe. It also doesnít mean that an entrepreneur is guaranteed to qualify. Business owners should work with their virtuals accountant in order to create a business plan that can increase their chances of being able to qualify for the loan. Another benefit of creating a business plan, is so that business owners have a plan in place on how to pay back the loan once they have successfully qualified for it.

By understanding that there are non traditional loans available to business owners, they can continue utilizing debt is a powerful tool to grow their business, and avoid the cash flow problems that have caused many businesses before them to run out of money and be forced to go out of business says virtuals accountant.

As business owners operate their business, they may need additional financing from time to time says virtual accountant. In order to make asset purchases in their business to help them not only go their business, but avoid the finance problems that cause so many business owners to go out of business. The problem with that, is that as entrepreneurs operate their business, traditional banks are less likely to approve businesses for financing, simply because the longer a business is in operation, the higher potential it has for cash flow issues, and businesses are far less likely to qualify for loans at least traditionally.

Business owners should understand that this does not mean that there is no hope for them in securing any type of loan. This also doesnít mean that business owners only resort is having to utilize high-interest loans that may cause more problems in the long run. By meeting with their virtuals accountant, business owners can find more information about the Canada small business financing program that can help them significantly in obtaining financing for their business. What this is, is a loan that is guaranteed by the federal government. Banks that had previously rejected loan applications from business owners, are accepting them on the basis that the federal government is guaranteeing the loan. This is great news for business owners that have applied at numerous financial institutions and have been rejected each time.

The biggest disadvantage with this type of loan, is there is a significant amount of paperwork says virtual accountant. The bank must coordinate with the federal government, and often means that bank manager has to work longer hours and outside of their processes in order to process the loan. Large banks may be less excited to loan money based on the Canada small business financing program, and while they will be able to say they wonít loan the money, since they can choose their own security, they may make the amount that a business must guarantee for security so high, that a business owner would rarely say yes. A business ownerís best bet is to approach small credit unions and small banks which in Alberta that means ATB or service credit union will be more apt to work with business owners and the federal government to make this wonít happen.

Business owners should understand that there is limitations on the phone, especially on what can be financed. By discussing this with their virtual accountant, business owners may find that the only things that can be financed are equals and equipment or any hard assets, and leaseholder improvements as well as land that must be used in an active business. What cannot be financed, is things like operating capital, payroll, advertising and marketing initiatives and things like websites.

Business owners can turn to great non-traditional loans as a way of helping their business utilize good debt is a powerful tool to help them avoid cash flow problems and grow their business.