How to Know if You Need a Small Business Loan

Canada is home to over 1.5 million companies, and the majority of them are small businesses. They include retail stores, accountants, landscapers, chiropractors, and bakeries. Many of these companies will need help paying for expansions or investing in their future. A number of financing options exist for such needs, including bank loans and government grants. Knowing which of these options is best for your small business is crucial.

Canada has a rich history of supporting its entrepreneurs and citizens who want to start a business. One such program, the Canada Small Business Financing Program, provides low-interest loans through participating lending institutions across Canada. It opened in 1981 and has been growing ever since.

The program offers to finance amounting to $100,000 and up depending on the type of business you have. The Canadian Federal Government guarantees a portion of the loan so participating lending institutions are more likely to offer favorable terms. What this means is that your loan should be approved in less time than applying for other types of loans because the risk to the lender is lower.

This is a great option for small business owners in Canada, however, there are a couple of downsides to consider.

If you have an existing loan or credit card with a lender that participates in this program, they will approve your application automatically so long as you meet their other requirements such as having at least one year in business. If you have an existing loan or credit card with a lender that does not participate, you can transfer your existing debt into a participating lender and then apply for the Canada Small Business Financing Program.

Partnering with a financial advisor can help alleviate some of these challenges;

Finding out you need a small business loan can be frustrating. You might feel like your business is holding back, or that you aren't living up to your full potential. But the fact is, money isn't made of gold...it's made of paper! So unless you have paper bills stacked up somewhere (or some other form of capital), things aren't quite as good as they seem. When that happens, it's time to start looking for financing.

While there are many reasons entrepreneurs seek out loans, most people fall into one of two categories: cash flow and growth.

The first category is cash flow problems. This happens more often than anyone thinks - companies look profitable because they're not spending money on certain things that would show their losses. For example, every business has operating expenses but some don't lay off employees in a slow season.

That means when business is good, they have the same number of employees and they're all busy. But in a slow season, no one gets laid off because costs don't go down. This leads to low profits during some seasons followed by high profits for other seasons (usually tied to busier times of the year). When you think about it this way, cash flow problems can happen more often than not!

The second category is businesses that need capital to grow their company. Every business has goals and dreams; small business loans help make those come true. Maybe you saw an opportunity and bought something with your savings or credit cards but now you need an injection of capital to get things going (or keep them going) until sales take off.

It's important to know the difference between the two because it will impact how you go about getting your small business loan. And just remember that even if you don't think you need a loan, at any time it might be a good idea to talk with an expert (like those at First Canadian Small Business Lending )

Here are 5 signs that point towards the fact that you need a small business loan now:

1) Your cash flow isn't enough: If your sales revenue covers only the cost of operating your business, that's a problem. If you're making enough money to keep the lights on but not much else, it means your cash flow is negative. And that means you need financing.

2) You have big plans for your business: If you're planning to expand or buy new equipment, you'll probably want to take out a small business loan. This will help cover all of those little costs associated with expansion or upgrades so that they don't cut into your bottom line.

3) Customers are asking about financing options: If one of your customers asks if you offer to finance, that's usually a good sign. It means they see value in what you do and want to work with you long-term. That also shows it's worth your time to look into different financing options.

4) You can't afford the financial requirements of bigger lenders: If you don't qualify for a bank loan, it might be time to turn to alternative sources of financing like peer-to-peer loans, microloans, or business credit cards (although these aren't ideal).

5) You're growing too fast for your current lender: If you need more than what your main lender is willing to provide, they might not be the right choice. Consider looking into other banks that are willing to offer larger small business loans.

Before applying for any type of small business loan, it's important that you do your research. Find out what interest rates and terms are available, and what you might need to do in order to get approved. You also want to make sure you're getting the best deal possible.

Finding out that you need a small business loan is tough, but it's not the end of your company. It just means your business needs some assistance growing. And financing can help with that.

It is important to have a full understanding of your financial situation and spending habits before applying for any type of loan. If you are unsure, taking advantage of free consultations offered by banks can help you explore all your options so you can make the best choice for your business