Managing Credit

Canada Small Business Financing Program

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Canadian Small Business Loan Program

From the CRA site:

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The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.

Term loans can be used to finance the following costs:

  • purchase or improvement of land or buildings used for commercial purposes
  • purchase or improvement of new or used equipment
  • purchase of new or existing leasehold improvements, that is, renovations to a leased property by a tenant
  • intangible assets and working capital costs

Lines of credit can be used to pay for working capital costs, that is, day-to-day operating expenses of the business.

The maximum loan amount for any one borrower is $1.15 million.”

As an SMB owner, this sounds terrific, doesn’t it? …not so fast.

There’s a link on that page, entitled Toolbox for Lenders, that specifies qualification criteria.

Net: if you can’t qualify for a bank loan on your own, this program is unlikely to help you.

Talk to us: we can help provide the interim financing you need.

Bank Loan Loss Provisions Up

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loan loss provisions

In this morning’s Globe and Mail, James Bradshaw reports ‘Scotiabank’s fourth-quarter profit slips on higher costs, increased loan-loss provisions.’

In his report, Bradshaw notes that “Provisions for credit losses spiked from ultralow levels last year”.  He goes on to note that “Scotiabank continued to face pressure on its profit margin on loans, with its net interest margin down four basis points”.

So what does this mean for SMB’s access to capital going ahead (even if you don’t bank with Scotia)?  We see at least the following key issues:

  1. Your rates will likely be going up on your next renewal
  2. It may be tougher to qualify for a loan
  3. If you don’t have your ‘ducks in a row’, you can expect to pay even more (see how we can help you)

Let’s talk about your financing requirements, and how we can help:

What’s Your Business Worth?

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business value calculator

A key component of the net worth of any SMB owner is the value tied-up in their business.

While most people have a good idea of their personal net worth, its easy to overlook the potential sale value of their business.

This calculator (presented for information purposes only) will give you a sense of the value of your business on the open market:

Use this information to build the value in your business!

Strategies for Uncertain Times

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Strategies for Uncertain Times

There’s no doubt that we’re in uncertain times:

  • Inflation is up, but it seems to be declining
  • Unemployment is down, but layoffs in certain sectors are increasing
  • Demand is up, but supply chains can’t keep up
  • Small business is ‘critical to the economy’, yet 45% of online sales are dominated by Walmart, Costco, and Amazon
  • Stock markets are recently up, but are way down YTD

So what’s the best strategy for a small business to maintain sanity – and prosperity – going forward?

There are 2:

  1. Drive out all risk from your business: reduce your debt, don’t take on more, defer capital purchases, conserve cash, optimize every aspect of your operation
  2. Look at your markets differently: who are you serving and why? Is there another market that you could serve that is nearby, or accessible digitally, that would be interested in your product or service? Find a way to reach them.

We’re happy to speak with you about any of these issues, to make your business more profitable – quickly.

A 7-Point Strategy to Improve Credit Score, to Help Your Business

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the importance of a good credit rating, and how to manage it

Everyone knows that cash flow is the lifeblood of small business.

Fair or not, cash flow very often relies on the personal ability of the principal owner of the business’ credit rating.

Even for incorporated businesses, the thinking goes that the business will behave as a credit entity in the same – or similar – way as that of the owner of the business. If the owner of the business has a less-than-ideal credit score, the business pays a higher interest rate, has to work harder at sales (just to break even), and is on a faster-than-necessary, less-efficient treadmill.

All because of a less than ideal credit score.

Here’s a strategy to get a grip on your score, and improve it as quickly as you can: 

  1. Contact Equifax and TransUnion (the two leading credit rating rating agencies in Canada), and order a detailed copy of your complete credit files. Be prepared to pay a nominal amount to get this vital information.
  2. When you receive your credit reports – go through them in detail: is there evidence of identity theft, fraud, or debts, missed payments, purchases, or other entries that are not yours? If so – contact the agency ASAP, and begin an investigation (this could take a few months to resolve).  Ask to have resolved variances removed from your report.
  3. Take a look at the number of credit cards you have, and the aggregate credit limit that you hold.  Do you really need this amount?  Start cancelling cards if you can, as this will signal to credit bureaus and responsible lenders that you are a responsible-with-credit borrower.
  4. Manage your credit card balances, so that they don’t exceed 30% of your available credit.  This also communicates responsibility. If you are offered to increase your credit limit, do so only with this as a guideline.
  5. Pay down your revolving credit card balances, and pay more than the minimum amount every month – this communicates to the credit bureaus that you take credit risk seriously, and your score will rise.
  6. Check your credit report once per year, and run-down any variances. Ask to have resolved variances removed from your report.
  7. Limit how frequently you apply for new credit.

We can help you get a grip on your business’ finances so that you can be positioned for growth.

We’d welcome a coffee-talk.