As most of our readers remember in our multiple articles in the past that  small business loans for start up are very challenging to obtain. Over the last 5 years, most schedule A banks, scaled down significantly their small business loan lending, government guaranteed loans also went through several years of complete silence. In this article we will go over some recent changes and guidelines from major lenders, in order to inform our clients and entrepreneurs with latest in this game of finance.

Most small business loans available for start-up businesses offered by WeCanFinancial.ca and our lenders are ranging from $150,000 to $250,000. There is a government guaranteed program that allows entrepreneurs to obtain up to $350,000.00 business loan without real estate component, and up to $500,000 with real estate component in the deal. What this means – if entrepreneurs purchasing business and real estate asset that is used in business operations, the leverage that can be obtained from small business loan program is 150,000 higher than without real estate. Now this difference with current real estate market values in Ontario is not very helpful, and it mostly exists as part of the program historically. $150,000 10 years ago could made a large difference after all, not at this time.

When entrepreneurs come to us for advice and help, they normally ask about this government guaranteed small business loan program, mostly due to talks and rumors from other business owners and entrepreneurs. At WeCanFinancial.ca our associates know this program in and out, but due to drastic changes in the industry and inability of most entrepreneurs to follow the guidelines set by this program, we normally offer easier ways of obtaining the desired business funding.

Now this article should mostly concentrate on start-up small business loans, what entrepreneurs have to do in order to obtain such financing? The most important item in this discussion is the availability of funds for specific sectors of economy. Currently start up business loans normally could be comfortably placed to: new doctors start up, law office start up, IT start ups, mechanic shops, small trucking start-ups, and recognized franchise start-ups. Entrepreneurs looking for funds to develop and run new business should know what the basic requirements are to be at least “qualifiable”.

Strong Net worth – preferably $500,000+

Personal Cash investment- either 35%-50% of start-up budget

Proven industry experience – preferably with previous Management or Ownership experience

Non written rule – ownership of real estate as demonstration of ability to invest in hard assets

Each application for a small business loan has to be complete at the time of submission. Most lenders have very strong and specific requirements on what needs to be submitted by the entrepreneurs wishing to obtain business funding. www.WeCanFinancial.ca specifically undertook a task to see if most lenders have good disclosures in regards to requirements on-line, and found that most lenders simply have no submission guidelines published, that would help entrepreneurs to prepare. Because we do not want to oversimplify this complex procedure we will list major “must be present” documents for the application.

Any application for small business loan must have:

  • Properly prepared business plan
  • Net worth statement
  • Proof of assets and cash
  • Opening Balance sheet
  • 2-3 year monthly cash flow projections
  • Break even analysis
  • Sensitivity analysis for the projections

Each of the documents above has to be in appropriate format for different lenders, therefore we advise our clients to start working on the application from the get go with one of our associates, to save time and money.

Doctors and other professionals normally have much easier times to qualify for a start-up start-up small business loan. WeCanFinancial.ca has several proprietary programs with combined unsecured portion of the business loan ranging from $500,000 – $1,000,000. This leverage is substantially higher that standard $250,000-$350,000 range that most business owners have heard about. The reason for it is a smaller investment risk profile for lenders, when business financing is placed in doctors or lawyers hands.

Another important point for food related business. Start-up small business loans are only available to strong franchise run restaurants, with super strong entrepreneur behind the business. Non branded restaurants have very small chance to qualify, and we will talk more about it in future articles.

Happy financing every one!