Find The Best Start-Up Business Loans in Canada
Have you finally decided to follow your passion and turn your expertise into a viable business? You are on the right path! However, to start a business, you would need a Business Loans in Canada.
You’ll get to know the real difference between planning and executing. Planning may cost you nothing, but the execution is expensive and needs total dedication. From a physical establishment to buying resources to hiring employers, marketing, and many other things, starting a business can be expensive when you try to get off the ground. Don’t panic; you’re not in trouble. You need to know the various ways to arrange the required capital to execute everything simultaneously and keep running everything smoothly.
Luckily, startup business loans are available that can help you start your business. In this guide, you’ll find out more about these unique loan products and how they can help you fulfil your dream of starting and operating your very own business.
Things To Consider When Finding A Startup Business Loan
When you take out a startup business loan, you will be given some time by the lending institution, and you’ll have to stay committed to them. And within that period, you will have to pay the money on time in regular intervals.
Thus, you may want to make sure you get the right loan. To do this, you need to look at some specific factors of business loans in Canada, including the following:
Rate of interest: The lender will provide you with a loan with some interest rate. The amount or percentage you are charged on your loan will determine how much you owe in total. The lower this rate, the less you have to pay. Even a fraction of one per cent in interest can mean a difference of thousands of dollars in total.
This is why you should look at the Annual Percentage Rate, which will tell you the fees along with the interest rate that the lender charges.
Eligibility requirements: Each type of loan has its own set of criteria that you must meet to get approval. Before applying with a specific company, find out what their requirements are.
Processing Time: Sometimes startup business loans in Canada take longer to process than other types of loans. While some loans can be processed within a week, startup business loans can take up to a month or longer, so you will need to be prepared for this.
Collateral: A secured startup business loan will require collateral to support the loan. This may include your domestic equity, your vehicle title, or the equipment you use for your business.
Loan amount: Make sure you understand how much you need to start your business, not to have over-arrears to borrow or a loan that is not sufficient.
Available Options For Startup Business Loan
Not every business is the same, and as such, various startup business loan products are available. Here are some options that you can consider depending on your specific type of business.
Unsecured Loan: A business loan that does not require collateral is a form of an unsecured loan. These loans are risky for lenders, and they come with a higher interest rate to offset this risk.
Secured Loans: Loans that require collateral as security and these loans are considered by most people and secured loans. You can use a valuable asset as collateral to get the loan. Just keep in mind that you may lose that property if you cannot pay back the loan amount. But this happens in rare cases.
Merchant cash advance: If your company takes credit card payments from customers, then a merchant cash advance can be helpful. With this loan, you will be given a lump sum loan amount from the lender in exchange for a percentage of future credit card sales. This may be beneficial for now, but in the future, when you earn a massive amount of profit, you’ll have to share it.
Equipment loan: This is a form of secured loan. An equipment loan uses the equipment that you buy to run your business as collateral for the loan. Once the loan amount is paid in full, you will own the equipment thoroughly.
Line of Credit: This is somewhat similar to a credit card. This type of revolving credit allows you to borrow an amount up to a specific limit whenever needed from a financial institution. This may hurt your credit score if you cannot pay it back on time or take a higher amount than the limit.
Requirements For A Startup Business Loan
Like other types of loans in the market, startup business loans in Canada has specific requirements that you must meet to get approval from the lending institution. Also, the requirements may vary depending on your credit history and lending institution:
Good Credit Score: If you apply from banks or traditional lenders, keep in mind that your credit score should be more than 540. And if you apply from other lenders such as Canadian Title Store, your credit history is not an essential factor. They provide title loans where you can use your vehicle as collateral that is fully paid for and get the required money. The loan amount will depend on the equity value of your vehicle. Moreover, you can pay back the amount whenever you want and manage to, and you will not be charged with any prepayment penalties.
A sound business plan: Your lender would like to see that you have made some efforts to come up with an intensive business plan that outlines what your experience in the industry is, what you planned, and what are your plans to take your business after starting it, and how much money you need to cover all relevant expenses.
No crime or bankruptcy in recent times: Your credit report will be pulled when applying for a startup business loan. And in addition to your credit score, your lender will be able to see if you have had a recent mess or bankruptcy. If so, it may hinder your ability to secure your loan.
If you’ve planned and dreamed of becoming an entrepreneur, you must know that every second is precious. So, stop calculating things and take a step forward to fulfil your dream.
