In addition to conventional loans, home equity loans, and investors, Canadian-based business owners have several specific options, loan options available to both new and existing business owners. Here we take a look at some of the government-backed programs and the high-level requirements are for each.
Canadian Franchise Financing Options
Loan Type
Common Features
Canada Small Business Financing Loans
(CSBFL)
Small businesses can borrow up to $1,000,000 with a full 85% of that amount guaranteed by the federal government.
- Annual gross revenue needs to be less than $10 million in the year you apply.
- Can be used for eligible start-up purchases like restaurant and hotel equipment
- Often have lower interest rates and better repayment terms due to government-backing
- Stringent qualification standards
Business Development Bank of Canada
(BDBC)
Offers a wide variety of loans, grants, and other financing options to both seasoned and new entrepreneurs.
- Programs for demographic groups (indigenous Canadians, immigrants, and women)
- Favourable terms
- Limited personal risk
Unsecured Lines of Credit
Helps to preserve cash with payments structured to meet your needs.
- Pre-tax funds can be from an IRA, 401k, 403b, 457, TSP, Pension, etc.
- Minimum of $50,000 in pre-tax funds required
- Monthly record keeping/compliance is required
- Timing is near four weeks from the start to funding
Personal Term Loans
Non-SBA Loan with terms between 5-7 years. Rates vary, with higher credit scores getting better the rates.
- Credit scores 700+
- Low credit card debt
- Employment helps with pre-qualifications
- 0% introductory rates on multiple bank credit cards
- Cards can typically be liquidated for near 90% of the lines of credit
- Rates vary – the higher the credit scores the better the rates can be
Equipment Leasing
Helps to preserve cash with payments structured to meet your needs.
- Credit scores 675+
- Lower upfront costs
- No personal assets pledged
Home Equity Loan
Taps into equity of home to cover a variety of start-up costs.
- Home used as collateral
- Must assess risk involved
- Longer payment terms
- Lower interest rates
- If you sell your home, must repay balance of the loan
Self-Assessment
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