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Virtual Accountant | What Are Non Traditional Loan Options
One challenge that many business owners face according to virtual accountant is running out of money in their business. Half of all entrepreneurs end up closing their business before the business for five years, and 29% of those entrepreneurs say the reason that they close their business was because they ran out of money. Businesses need to be very aware of the money that they have in their business at all times, and when ever they can, utilize financing as a tool to help them increase the cash flow in their business. The way they can do that, is by financing assets whenever they can, because assets are much easier to finance than operating capital. Business owners then save their money in their business in order to utilize is operating capital. This is a great idea, but many business owners are discovering that they no longer qualify for traditional loans, and if thatís the case what options do they have to help them not only avoid cash flow issues in their business, but help them grow their business as well.
Business owners should meet their virtuals accountant, and discuss all of the non traditional financing options that are available in Canada. One of the most unknown programs is called to Canada small business financing program. This can loan up to $1 million to small businesses who are making less than $10 million in revenue each year. This is a huge threshold of businesses who are qualified to apply.
One of the first things that business owners should take note when considering applying for this loan, is that only certain things can be financed. Businesses can get up to $350,000 in order to finance hard assets such as vehicles or equipment. They can also use up to $350,000 order to fund leaseholder improvements on their buildings. Virtual accountant says that they can also qualify up to $1 million for real estate that must be used in the active business, or a combination of real estate and assets up to a maximum of $1 million. Some very specific things can be financed, and some specific things must not be financed as well. Operating capital, payroll, and marketing efforts such as advertising and websites cannot be financed.
Many business owners wonder why this loan can be utilized when they have been turned down for traditional financing from their bank. Upon consulting with their virtual accountant, business owners discover that the reason is because this loan is guaranteed by the federal government. Therefore, banks that wouldnít have loaned money to businesses before, will loan money now, because the federal government is guaranteeing theyíll get their money back. They also need to understand that there are disadvantages with this type of loan, and the biggest disadvantage is that there is a significant amount of paperwork, and larger banks often donít want to have to go through the work. While they canít deny the business owner this loan, they can choose their own security on it, and often make the security so high that business owners would be silly to put their own assets on the line for this kind of terms.
Business owners often run out of options as they run out of cash in their business says virtual CFO, because they need to avoid cash flow issue, but there are also no longer qualifying for financing in their business anymore either. Many business owners think that this may be the end of their business, but there are options that business owners can apply for once they have been denied traditional financing. Fortunately, this is not by utilizing high-interest loans, or loan sharks. By knowing the options that are available to them, business owners can utilize financing as a tool to help them grow their business.
Once they consult with their virtual accountant, business owners may discover Canada small business financing program, which can loan small businesses up to $1 million for asset purchases. Businesses that can qualify our small businesses that make under $10 million in revenue. This means that there is an extremely high threshold of businesses who are able to apply for this loan. The reason this loan can be used when businesses have been disqualified for more traditional loans, is because it is backed by the federal government. Banks will be less likely to turn down entrepreneurs if they know that the federal government is guaranteeing that loan.
This does not mean however that the loan is risk-free however. Business owners may want to check with their virtual accountant in order to ensure what the securities can be on this federally government backed loan. The banks that are in charge of issuing this loan can actually request any security they want on it. Which means, they can ask business owners to provide a personal guarantee on the entire amount, and if the business owner defaults, the bank and go after the business in order to pay it back.
Itís also very important that business owners understand that this is also not guaranteed loan as well. By discussing with their virtual accountant, business owners can create a business plan that can help them apply for the loan and be more likely to qualify. Not only is it important for business owners to have a business plan to help them qualify for the loan, but it can also help them create a plan for how theyíre going to pay back that loan when they do get approved for it. Having a formal plan in place is a great way for business owners to improve their chances of succeeding.
When business owners need non traditional financing, they can often utilize the federal government backed Canada small business financing program, which can help them secure loans in order to help them grow their business that they may not be able to do if they depending solely on traditional boning agencies to help them grow their business.