How to Acquire a Business Loan in Ontario?
The Ontario province in Canada provides an excellent business environment for entrepreneurs and for small businesses to grow their company operations. According to recent surveys, Ontario is considered one of the top places in the world for companies to establish their headquarters and for investors to invest in new ventures making it vital for business owners to access small business loan in Ontario.
The reason for this investor-friendly environment is a stable and competitive business landscape that allows companies to implement quality business practices and grow in a competitive business environment. The long-term political and economic stability enables lenders to fund businesses in this region with long-term repayment options, and for this very reason, Ontario (and Canada) has one of the most stable banking systems in the world.
Business Loan Options in Ontario
1. Bank Loans
Banks have streamlined loan disbursal processes which have been refined through their years of operations in the industry. There are many banks in Ontario that provide businesses with multiple financing options that are tailored to their operational needs. Each bank has its eligibility criteria that they use to gauge your business’ health. The Banks that are famous in Ontario for their business loans include TD, RBC, CIBC, BMO, Bank of Nova Scotia and Business Development Bank of Canada.
If you don’t automatically qualify for a business loan at your bank, then organizations such as CSBFP – Canada Small Business Financing Programs can share your risk with your financial provider to raise your loan limit up to $1Million. Once dispersed, these loans can be utilized for business upgrades and new equipment purchases apart from store inventory.
The downside of bank loans typically comes down to strict approval criteria and long application processing times. Banks are able to lend money to small businesses that have high revenues, have been around for a long time and whose owners have a high personal credit rating. This means that there are a large number of small businesses that are not eligible to obtain bank financing at a low-interest rate. For example, a recently opened restaurant that’s just been around for a year or so may be considered too risky an investment for the bank. Thankfully, these businesses still have other options.
2. Online Business Loan Providers
As the name suggests, these types of loans take small business owners through an online experience to apply (and, hopefully, get approved) for a loan. Companies like OnDeck are looking at small businesses from a different paradigm when evaluating their creditworthiness. They’re looking for metrics that express a healthy business, rather than relying on the personal credit history of the business owner. The approval process is less rigid for a small business loan with such company than it is with a bank, however, the interest rates may be higher (depending upon the lender).
You can typically get the loan in different forms, from a typical term loan with regular repayments or a line of credit.
The loan is typically unsecured, meaning that no collateral is required to obtain the cash, and this cash can be used for anything that the business needs, including inventory, staffing, new equipment, expansion and more.
3. Secured Loans
If you are looking to purchase a specific piece of equipment such as a truck, bus or manufacturing equipment for your business, you can finance that purchase directly. This means that the loan you are receiving is going specifically toward that purchase and this newly acquired item is used as collateral for your loan. If a trucking company operator finances a new truck but is unable to make regular payments, this truck may be repossessed by the loan provider.
4. Crowd Funding
Crowdfunding can be an effective option to secure working capital from a crowd of individuals who are interested in contributing to your business idea. One type of crowdfunding involves small individual investors who participate for an equity stake in your small business. Crowd investors usually fund online and are attracted to the growing and stable business environment in Ontario. The investors are paid either through rewards such as company shares or equal monthly installments. Such type of funding requires a strong business idea and the ability to motivate investors to participate in your business idea. Crowdfunding is also a great way to test new products and validate ideas within the crowd.
Ontario is a great place to establish a new business or strategically invest in business growth. The economic and political stability of the region provides businesses with great access to extra working capital through banks and other lending sources, including OnDeck. If you are a small business in Ontario, feel free to give us a call anytime to better understand your financing options.