Small businesses are the foundation of the Canadian economy, accounting for 98.2 percent of the country’s 1.2 million businesses (less than 100 employees). Furthermore, almost a quarter of Canadians want to start or run a business. With so many entrepreneurs looking for funding, it can be difficult to find a lender willing to offer you money to help your business grow and prosper.
Although most banks and credit unions provide business loans, smaller businesses may find that they do not meet their high requirements. A number of online lenders and lending platforms have come in with attractive rates and terms to meet the increased demand for small business loans, with Freedom Capital being one of them.
Looking for the best business loan in Canada for you? Here’s how to get started with your Freedom Capital business loan.
Why Freedom Capital?
At Freedom Capital, we strive to provide financial solutions for every borrower. We offer a number of different loan options with different terms and repayment schedules, including traditional business loans, lines of credit and first, second and third mortgage, and even construction and land financing.
With Freedom Capital you can get approved for your mortgage in as little as 24 hours, making us one of the speediest lenders to issue business loans. We offer competitive pricing with interest rates and loan terms that are easy to meet for any borrower.
Looking to get started with your Freedom Capital business loan? Here’s a step-by-step process for you.
How to Get Started with Your Business Loan
Step One: Figure Out Your Motive
Knowing why you need a business loan is the first step. Loans of all kinds are provided to businesses by banks. Your particular demands will determine which is best for you. Various loans are available for beginning a new business, growing a tech company, purchasing another company, investing in equipment, technology, or a building.
Putting your demands in order will help you decide which loans are best for you and how to present your case to a lender.
Figure Out Your Financing Needs
Knowing your needs clearly will help you determine how much money you need. It’s important to avoid taking on more debt than you can manage, but it’s also crucial to avoid underestimating your financial requirements and borrowing too little. That can force you to run out of money when you least expect it.
Examine or revise your cash flow prediction to determine how much you need. This enables you to foresee working capital shortages over the next 12 months, including any instances of significant cash withdrawals related to planned investments. Plan your funding request to make sure you have access to enough cash all year long.
Step Two: Pick a Type of Business Loan
#1 – Short-Term Loans
With a short-term loan you just pay back the entire amount in full on a given day as opposed to making set monthly payments. They are ideal for things like building inventory, generating money for accounts payable, or executing some form of project that would provide you a quick return; as their name would suggest, most business owners utilize these to satisfy their short-term needs.
The majority of short-term loans have a value of under $100,000. They are offered by banks, credit unions, and other licensed lenders, and they are particularly beneficial for those who own seasonal businesses.
#2 – Long-Term Loans
The most common types of business loans are long-term loans, and for good reason. Long-term loans are frequently provided by commercial lenders for purposes such as working capital, refinancing, acquisitions, and even business expansion. For a long-term loan with a competitive interest rate, you’ll need good credit and a successful business, but if neither of those criteria apply to you, be sure to create a strong business plan before applying.
Even if you have bad credit, you might be able to get the money you need if you can show that the loan would help your business expand.
Step Three: Settle On Some Mortgage Terms
Loan terms and conditions vary greatly depending on the financial institution and type of loan. It’s common to focus on the interest rate, but other elements can be just as important, you should shop around for the right terms and conditions.
Look into these terms and conditions:
Interest rate: The sum of money that must be paid back each month will be determined by this. While your interest rate is undoubtedly crucial, other elements should also be taken into account because they may relieve strain on your company in the event of financial difficulties.
Amortization period: Loan conditions are important. Longer repayment terms do result in greater long-term borrowing costs, but they also result in cheaper monthly payments. Your cash flow may thus be less strained as a result of this.
Lender’s flexibility: Find out what would happen if you weren’t able to make your planned loan repayments by speaking with your lender. Would your lender, for instance, permit you to temporarily stop making principle payments?
Percentage of project cost that will be financed: The size of the personal investment you must make will depend on this, as will the decision of whether to partner with a second bank.
Debt covenants: As part of their loan agreements, borrowers make pledges to lenders known as covenants. The loan may theoretically be in default if a borrower violates a covenant because its conditions are not being followed. In this case, the bank can demand repayment of the full debt.
Collateral and other guarantee requirements: The majority of lenders on the market base their loans on an asset. For instance, they might consider buying a possible building, estimate its worth, and lend you a portion of that amount. Similar to BDC, other lenders also base their loans on cash flow. They will consider your income and outgoing costs before granting you a loan without requiring security based on your profits. This enables you to borrow more money to expand your business.
Financial reporting requirements: The majority of loan agreements have financial reporting requirements that call for submitting annual financial statements and reports to the bank. Less stringent reporting requirements are customary for smaller loans.
Step Four: Contact Us to Get Started with Your Business Loan!
Get in touch with a Freedom Capital professional today to get started with your alternative business loan. Contact us at [email protected] or fill out the online form for a free quote today.
