What Are Government And Non-Government Business Loans | Free ...

Canadian small businesses can choose from non-government and government business loans, with funds offered to finance business expansion, setups, and operations. Government loans are available under the Canada Small Business Financing Program, and businesses can borrow in the amount of up to $500,000. Of this amount, they can use up to $300,000 for the purchase or improvement of new or used machinery or equipment and for the improvement of leasehold property or the purchase of leasehold improvements. Money in the form of small business loans bad credit can be used to finance franchise leasehold equipments, commercial vehicles, land and buildings, and production equipment. Businesses can use the funds for restaurant and hotel equipment, computer and telecommunications equipment, software, etc. Financial institutions that participate in the program offer secured business loans meaning that they take security in the assets (equipment, land) being financed. In addition, banks may take unsecured guarantees, but these cannot be in excess of 25 percent of the funds advanced. Government business loans are a good option for startups and established businesses that seek to expand or make improvements. They can choose from fixed and variable interest rate, but the rate of interest is determined by the different financial establishments. A registration fee of two percent of the amount borrowed applies. Borrowers pay this fee to their bank of choice. Under the Canada Small Business Financing Program, financial institutions are responsible for making and administering loans. The same procedures should apply as for standard business loans. With regard to financial institutions that participate in the program, businesses can apply for a business loan from Scotiabank, National Bank of Canada, Bank of Montreal, Canada?s credit unions, etc. As an alternative to government business loans, businesses may check with a credit union or bank of choice. Requirements and lending criteria vary from lender to lender. Businesses may have to present information regarding their debt level, expenses, income, etc. Applicants may include a list of securities such as buildings and land, equipment, fixtures and settings, commercial vehicles, etc. Businesses should prove ownership of any buildings and land offered as collateral. Banks and other financial establishments recognize around sixty percent of their value. Borrowers who use equipment as collateral should give values and description. Financial establishments usually lend 50 percent of their market value. Fixtures and settings are in the same category ? financial establishments advance around fifty percent of their realizable value. Business owners can offer commercial vehicles against the loan, and most financial institutions lend about 60 percent of the vehicle?s realizable value. Regarding shares, financial institutions advance around 60 percent of the shares? current market value. Most financial institutions will not accept goodwill as collateral. Banks accept life insurance policies as collateral and advance funds on their cash surrender value. In addition, some banks require guarantors, and business owners should be able to offer names of friends, relatives, or partners who will act as guarantors. Persons with a high credit score and reputable business can act as guarantors. This web site has tons of useful information.

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