Why is it important to keep records? This is because it helps you identify the sources of your income and help you in deciding whether you should apply for a GST/HST.
If you are looking to start or expand your business but don’t have enough budget to do it, getting financial assistance can be difficult. You need to have a clever strategy in finding the best option the fits your business financial situation. Most lenders look not just at your business credit history but also oversees your personal credit scoring to find out if you are eligible. You have to establish a good reputation and lay out a clear business plan. Have your best foot forward by preparing answers to these 3 questions most lenders will ask you: > How much do you need and how will you use the money? - Your answer to this should be specific Example: I need $150,000 to put up a small flower shop. 40% ($60,000) will cover the rent for 6 months. 10% ($15,000) will go to minor shop renovation and then 30% ($45,000) will fill up my inventory 20% ($30,000) is for my logistics and technology. > Does your business have the ability to make the payments required under the loan? - Existing business need proof of solid cash flow sufficient to the terms of the loan, for new business owner’s they can show that they’ve been profitable in a business venture in the past, or have strong expertise and have done their research in the particular industry of the business. Your business structure also plays a huge part in this part. The incorporated business gives business more credibility not just with lenders but also with suppliers, customers, and even investors, they see a corporation as being more stable than a sole proprietorship. > How will you repay the loan – You need to assure the lender that you are able to pay your loan even when the market is low. Showing them you have enough savings, or got some assets or other collateral will give them the security that you can repay what you owe.
Create a Business Plan
A well-thought business plan is your first step for loan approval. This will show the lender that you have a clear roadmap for growth, backed by research, financial data, and product strategy, this will also determine the right loan program, based on your needs, goals, and financial projections. A business plan should tell a story about your business, the importance of a business plan goes beyond securing a loan, it is your key to a successful business. A business plan can help you achieve your goal.
Register your business
This secures your reputation as a legitimate business, your registered business name will appear in all your contracts or agreements including loan agreements. If you are planning to start a business and you already have a name for it secure the name by registering it so that no one else can use it legally. Take a few easy steps to secure your business name and have it registered to make it official.
Decide which type of lender you would want to go to.
Most small business owners don’t know their option when it comes to getting funding assistance so here are the different types of the lender you can turn to:
Their lines of credit are perfect for covering day-to-day operating costs or pursuing a unique and time-sensitive business opportunity. A loan, on the other hand, is best suited for one-time, larger expenses. Small business and commercial loans come with a range of terms and payment options that give you the flexibility to successfully manage your business and your money.
They Customize your business credit needs with multiple products under one global credit limit.
From covering your daily operating costs to opening a new storefront, they'll help you get access to funds for your business goals up to your approved limit, with a CIBC Business Line of Credit. Use it to support your cash flow and meet your short-term business goals.
Whether you’re an emerging start-up or an established business looking to expand, you can find the financing solutions to help your business reach its full potential. From short-term operating loans to long-term financing to help secure the future of your business.
These are private companies that operate like banks by providing loans to businesses. Alternative lenders in Canada currently offer all types of business loans, except for long term installment loans and commercial mortgages.
Government loan depends on your industry and your region. Most especially during the pandemic, the government of Canada took different measures to support small businesses. There are different economic response plan that can help business owners facing hardship due to the COVID-19 outbreak. It is best to shop for options to see which ones fit your needs and best suits your financial abilities.
Prepare the needed Financial Documents.
Depending on the lender, there may be several specific documents required in order for you to get approved. Lenders usually ask for:
In order to secure a loan approval you should clearly define your goals and needs and knowing your option is an advantage in securing the right loan for your business. Preparing for the potential requirements will make it easy for you to prove your credibility.