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SMALL BUSINESS
ENTERPRISES
S
L O A N S
N
SMALL BUSINESS
FOR
A
O
ENTERPRISES
L
FOR
INVESTING IN they are willing to include WHICH BUSINESSES
CANADA’S FUTURE their personal assets as loan ARE ELIGIBLE?
security. Those wanting to Most small businesses
Small business is one of the start up new businesses face
fastest growing segments starting up or operating
similar problems. Under the in Canada are eligible for
of Canada’s economy. SBLA, the federal govern- SBLA loans, as long as their
Imaginative entrepreneurs ment partially offsets any estimated annual gross
with drive and spirit are losses on SBLA loans. The revenues do not exceed
creating thousands of new result is that financing is $5 million during the fiscal
jobs and new opportunities more accessible, and owners year in which they apply for
for our country’s future. do not have to provide per- a loan. Eligible businesses
The Small Business Loans sonal assets as security to include professional prac-
Program was created to support their business tices but exclude farming
help small businesses reach financing requirements. and charitable or religious
their potential by making enterprises. Businesses may
it easier for them to get
WHO ISSUES be sole proprietorships,
term business improvement THESE LOANS? partnerships or incorpo-
loans – BIL – to finance the Chartered banks, caisses rated companies.
purchase or improvement populaires, Alberta
of fixed assets for new or Treasury Branches, most HOW CAN LOAN
expanded operations. credit unions, and many PROCEEDS BE USED?
trust, loan and insurance Loan proceeds may be used
Administered under the
companies are authorized to to finance:
Small Business Loans Act
make loans directly to small
(SBLA), the program is a • the purchase of land,
business owners. Lenders
joint initiative between the are required to make SBLA including any structures
Government of Canada loans with the same care thereon required to oper-
and private-sector lenders. they use in their other areas ate the business (land
of business, to assess credit loans);
WHY AN SBLA LOAN? worthiness and draw up • the renovation, improve-
Owners of small businesses agreements following ment, modernization,
frequently lack the funds normal lending practice and extension, construction
they need to pay for busi- to administer the loans in or purchase of premises
ness improvement or expan- accordance with specific (premises loans);
sion. Financing may not be program requirements.
available to them unless
• the purchase, installation, case with land and premises The lender may charge a
renovation, improvement loans made to tenants. The penalty for prepayment
or modernization of new lender may take personal of a fixed-rate loan.
or used equipment guarantees not exceeding, in
(equipment loans). aggregate, 25 percent of the ANY OTHER COSTS?
original amount of the loan. Lenders are required to pay
DOES THE SBLA EXCLUDE These guarantees may not be a one-time loan registration
ANY LOAN PURPOSES? secured with personal assets. fee to the government equal
Loan proceeds cannot be to 2 percent of the amount
used to: WHAT ABOUT LOAN loaned. The fee is recoverable
• purchase shares or other
REPAYMENT? from borrowers who may
The period during which reimburse the lenders when
types of ownership in a
a loan must be repaid will their loans are advanced or
business enterprise;
generally coincide with the have the amount of the fee
• acquire working capital added to their loan balances,
expected economic life of the
(finance inventory, provided that the individual
asset being financed, up to a
accounts receivable, etc.); borrower’s loan maximum
maximum of 10 years.
• pay off existing debt Instalment payments on of $250,000 in total is not
(unless the loan is used the loan principal must be exceeded.
to refinance eligible scheduled at least annually,
fixed-asset purchases but monthly payments are
made or committed usually called for depending
within 180 days of the
HOW DO I APPLY?
upon arrangements between
loan approval date); Contact the lender of your
the borrower and the lender.
choice to find out more
• purchase real estate
HOW ARE INTEREST about the SBLA.
for resale;
• purchase or improve RATES DETERMINED?
real estate for lease or Under the SBLA, borrowers
sub-lease purposes (hos- may choose between:
pitality, health care and • floating-rate loans, where
mini-storage industries are the interest rate fluctuates
exempt from this with changes in the
exclusion). lender’s prime lending
rate over the term of the
ARE THERE loan, but cannot be more
BORROWING LIMITS? than
The maximum value of 3 percent over the lender’s
loans a borrower may have prime lending rate; and
outstanding under the SBLA • fixed-rate loans, where the
cannot exceed $250,000. interest rate is fixed for the
Loan proceeds may be used term of the loan, but can-
to finance up to 90 percent of not be more than 3 percent
asset acquisition or asset over the lender’s residen- Small Business Loans Administration
improvement costs, subject
$
tial mortgage rate for Industry Canada
to credit approval and at the applicable term. 235 Queen Street
the discretion of the lender. This 3 percent includes OTTAWA, ON
Lenders are obligated to take K1A 0H5
an administration fee
security on the assets of 1.25 percent payable by Info line: (613) 954-5540
financed and on other busi- the lender to the govern- Fax: (613) 952-0290
ness assets, as may be the ment annually. October 1996
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