Virtual Accountant | What Loan Options Are Available For Small Businesses
Obtaining financing is often very critical activity for many small businesses says virtual accountant. As they operate their business, and run into cash flow problems, businesses may apply for more financing in order to help them grow their business. The only problem is that as business owners run to the cash flow issues, traditional banks are less likely to approve them for loans. If businesses arenít able to secure the financing that they need, they may run into a cash flow issue, that may cause their business to not be able to operate anymore. Half of all entrepreneurs end up closing their business within five years, and 29% of them list running out of money as the reason why their business failed. Business owners should regard good debt is a powerful tool rather than assuming all debt is bad.
If business owners have been rejected from financial institutions for getting loans, they are not necessarily completely out of luck. Business owners can ask their virtual accountant if there any options available to them and they may discover that the Canada small business financing program is the perfect program for them. This is because it is a loan that is backed by the federal government, and so many businesses that have been turned down for loans from typical financial institutions, may find that they qualify for loans here. Banks are more likely to loan entrepreneurs the money, since the federal government is effectively guaranteeing the loan. There are many things that business owners need to know when it comes to this loan, in order to help them qualify for it.
Business owners might be told by their virtuals accountant that there is a disadvantage to this loan, primarily the amount of paperwork that goes into preparing it. Because this often falls outside traditional banks processes, or takes additional time, they may be less inclined to want to take on Canada small business financing loans. While they canít out right deny it, banks that arenít willing to go through the additional work may ask for such a high security on the loan, that it does not make sense for business owners to agree to. Because of this, business owners should know that there best option may be applying for those loans at smaller banks as well as credit unions. This means that in Alberta, a business ownerís best chance would be with service credit union or ATB.
Itís also important that business owners understand not everything under the sun can be financed with the Canada small business financing loan. By checking with their virtuals accountant, business owners can discover that this loan is available for hard assets, leasehold improvements and land that is used in an active business. He cannot finance operating capital, advertising or marketing efforts including websites or payroll to name a few.
The consulting with their virtual accountant, business owners that have a hard time qualifying for traditional loans may find that the Canada small business financing program is a great fit for them to be able to grow their business, even if traditional banks have turned them down.
Itís in the business ownerís best interest to try and maximize the amount of loans that business owners qualify for as soon as they open their business says virtual accountant. The reason for this is because as business owners operate their business, the potential for a cash crunch takes banks shy away from wanting to loan businesses that have been in operation for a while. Because of this, when business owners have reached a point where they need to grow their business again, they may find that they are having a hard time securing loans in order to help them do that. Business owners may believe that they have no options once theyíve been turned down by traditional financial institutions, or they may have to go with extremely high interest loans but thatís not necessarily the case. There are options business owners can access that can help them efficiently grow their business.
By consulting their virtuals accountant, business owners may discover the Canada small business financing program. This is a little known program that can help small businesses qualify for loans up to $350,000 for assets, or up to $1 million in real estate, or real estate and assets. There is a wide threshold of businesses that can qualify for this program, if they are small businesses that make less than $10 million in revenue per year.
There are several advantages to this loan, and the biggest one being that the federal governmentís effectively guaranteeing this loan. Once they speak to their virtual accountant, business owners can discover that since the federal government is backing the loan, many banks who would otherwise not qualify that business for the loan will accept them now. This is great for any business who has been turned down from typical banks for funding, business owners who donít have a credit history in their business yet and canít get financing, or businesses that need to fund traditionally risky projects.
Cautions businesses that there are some disadvantages to this loan, that they need to be aware of before they apply for it. The biggest disadvantage is because banks have to coordinate with the federal government in order to accomplish the paperwork that needs to go along with this. It also means that banks cannot set their own policy even though theyíre doing their own work. This may go outside the banks typical processes says virtual accountant, or take them more time than usual. Large banks may not be interested in doing the additional work associated with this, and while they canít reject flow out rate, they can ask for a personal guarantee on the loan thatís so high, business owners would reject the offer. In order to get around this challenge, business owners should first approach smaller credit unions and smaller banks, as they are more likely to offer help to small businesses.