Small Business Loans

Though the requirement of finance for the small business enterprises is not as much as it is in the case of big enterprises and the industrial house, the importance is the same because without the appropriate finance, all the activities of the small business enterprises would come to a grinding halt. The small business sector is very much important for the economy of any country as it is an important contributor of the gross domestic product and Canada is no exception to this. Let us discuss the small business loans in Canada next.

The Small Business Loans in Canada

The small business units located in Canada also feels the need for the finance as in any other parts of the world. This is the reason why one finds many a financial institutions like banks, non-banking finance companies etc that provide various types of loans to the small business units. The small business loans in Canada are given for the various purposes. These are:

Working Capital Advances: This type of loans that are provided to the small business enterprises in Canada are also known as the revolving credit. It is said so because the small business unit is given a limit on the basis of its requirements as calculated by the officials and it is allowed to withdraw and deposit the sum up to that limit. Thus, there are no restrictions as far as the number of transactions is considered. The only requirement is that the limit should not get crossed. It is to be noted here that the above limit is provided against the stocks, accounts receivable of the small business unit and this type of limit is basically used to bridge the gap between the current assets and the current liabilities. Mostly, this type of limit is used to pay the various suppliers etc of the small business unit.

Term Loans: There are also term loans that are provided to the various small business units located in Canada. These loans are essentially given for the purchase of fixed assets, making improvements in the assets of the enterprise. These loans are not provided for the working capitals. Generally, these loans are given at a fixed rate of interest and they are repaid by means of the installments that run up to 20 years maximum generally. The repayment has to

be done from the proceeds of the unit and these are well calculated by the officials of the lending institution so that the borrower does not feel unable to repay this. Also, these types of loans are generally secured by the tangible securities or the asset that has been purchased out to of the loan amount. If we compare the rate of interest that is charged on term loans to the rate that is charged on the working capital advance, one would note that the rate of interest is more in the case of working capital advances.

Other types of advances: Apart from the above two types of advances that are primarily used for making the advances to the small business units in Canada, there are also other types of financial assistance that are available like the letter of credit, the lines of credit, the bank guarantee etc. Thus it can be easily said that there are many types of small business loans that are available to the small business enterprises in Canada. Let us see, what are the various financial institutions in Canada that provides these loans.

Financial Institutions in Canada

Before we start discussing the various types of financial institutions in Canada that provides the loans to small business enterprises, it is to be noted here that there is also a Canada Small Business Finance Program, which is also known as the CSBF, under which the small business units are provided the capital loans and leases under the CSBF Act. The loans are provided only in the form of term loans and there is no working capital financing that is done under the CSBF Program. Let us see what are the other sources of small business loans in Canada. First of all, if you are a woman entrepreneur, there are many sources from where you can get small business loans for your business enterprise. This is because the women are given preference while providing loans to the small business enterprises in Canada. Apart from the small business loans, the women are also given preference in passing the grants by the various government bodies in Canada. One of the various institutions that provide small business loans to women is the Alberta Women Entrepreneurs. It is a non-profit organization that provides the loans to the women entrepreneurs in Alberta and workshops, networking etc.

Business Development bank of Canada, also known as the BDC, is another institution that provides small business loans to the entrepreneurs in Canada. It also provides loans for the start up of the small business units. Any small business that demonstrate the long term viability also gets the customized term financing up to $10000 for the start up. A person can also get the small business loan in Canada under the Business Development Program in Atlantic Canada. It offers the interest free and unsecured loans to the various persons living here to start up as well as expand their existing small business units. There is also Calmeadow, a non-profit organization that provides the access to the credit and the other financial services to the various self employed people in Canada. All the small businesspersons that have been denied the loan are given preference under this program. One also finds the Canadian Youth Business Foundation Loans Program for the persons that are in the age group of 18-29 years and who have a sound business idea. These have to work in tandem with a mentor. The quantum of loans that are given under this program is $15000 maximum. In this program also, the persons that have been denied the loans by the various financial institutions are given the preference. These are some of the institutions and programs under which a person in Canada can get a small business loan. Apart from this, there are many other programs and institutions like CIBC small business loans, Community Business Development Corporations, E-commerce Business Development program, Industrial Research Assistance program etc under which a person can also get the small business loan. So, there are many types of small business loans that are available in Canada.

So, there are many sources of small business loans in canada

Thus, it can be said without any doubt that there are many sources from which a person can easily get the small business loan in Canada. The women entrepreneurs are of course given preference in providing these loans.