Applying for financing can feel intimidating, but a prepared owner is a confident one. Before you talk to any lender, take time to answer the questions below.
How much do I really need?
Add up the cost of equipment, stock, working capital and a small cushion. Borrowing too little can leave you short, while borrowing too much adds interest you do not need.
What can I offer?
Lenders usually look at your personal credit history, your business plan, your cash flow forecast and any assets you can pledge. A new business without a track record may need a co-signer or a government-backed program.
Which type fits?
Term loans suit equipment and larger purchases. Lines of credit help with short-term cash gaps. Government-supported loans can lower the lender’s risk and may help owners who would not qualify otherwise. Organisations such as the Business Development Bank of Canada and Futurpreneur support new and young entrepreneurs, and some credit unions have community lending programs.
What will it cost?
Compare the interest rate, fees, repayment schedule and what happens if you pay early. Ask for a simple example in dollars.
- Prepare a one-page summary of your business.
- Keep personal and business finances separate.
- Ask a mentor or accountant to read your numbers.
The chamber offers a short course on applying for small-business financing, and members can ask the mentorship committee for an introduction to someone who has been through the process.