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Wednesday, 3rd November 2021 | Small business financing Canada

How do Canada small business loans work?

Understanding how a Small Business Loan Works can help you secure one easily. Read our blog to know everything about Small Business Loans in Canada and how Capital is the perfect choice for securing your business loan!

Every small business will need to acquire financing at some point in order to remain competitive in its market. Perhaps there are growth plans in the works, or a new marketing strategy needs to be funded. Small enterprises in Canada rely heavily on loans to stay afloat. This article delves into the workings of Canada’s small business loan programs and how iCapital can help small businesses with easy loan approvals.

What Is A Small Business Loan?

A loan is a type of debt that a small business takes on. The borrower receives a sum of money from the lender, which is frequently a corporation, financial organization, or government. In exchange, the borrower agrees to a set of terms, which may include finance charges, interest, a repayment schedule, and other stipulations.

What Is A Small Business Loan Used For?

Small business loan fixed assets and cover day-to-day working and operational capital expenses. Cash flow, equipment upgrades, inventories, renovations, staffing, marketing, tax payments, and supplier payments are all examples of this.

Documents Required to Qualify for Small Business Loans

Various documentation may be required to validate your information when applying for a small business loan:

Plan of Action

By giving a copy of your business plan to the lender, you can demonstrate why you need a loan and how you plan to use the funds. This paper will assist you in gaining the lender's confidence.

Bank Account Statements

Lenders may want to check your company's cash flow.

Balance Sheet

Your lender usually requires this to assess your complete liabilities and assets.

Income Statement

Your income statement will show your lender what your expenses are, as well as your cost of goods sold and net income.

Returns on Income

This will be used by your lender to verify that the income you stated matches what you reported to the CRA. Any differences may endanger the approval of your application.

Financial Records of Individuals

Some lenders may request a copy of your credit report to assess your financial situation. A “good credit score” depending on the type of loan is defined as:

Short-term Business Loan - 550
Equipment Financing - 600
Small Business Administration Loans (SBA) - 640
Bank Loans - 700+

Purchase Information

Some lenders might also want to review information pertaining to the assets you wish to purchase, purchase agreements, and sales contracts in effect.

What Is The Cost Of A Small Business Loan?

The amount that the lender will charge determines the loan's cost. The amount, or interest rate, will be determined using the current Canadian index rate, your estimated credit risk, and the loan term duration. A long-term loan with a strong credit score will cost less in interest than a short-term loan with a bad credit score.
The interest rate may be fixed or fluctuating. A fixed rate does not alter during the life of the loan. A variable rate is based on the Canadian index rate and will fluctuate as per the index rate.
Fees may be charged before, during, and after the lending transaction. Application, cheque processing, paperwork, late payment, prepayment, and returned payment are all examples of fees.

In Canada, Where Can You Acquire A Small Business Loan?

Established Banks

Small firms frequently borrow money from large banks as they prove to be a common source of capital.

Credit Unions

Credit unions are financial cooperatives that offer their members standard banking services. As they are not-for-profit, they can at times provide better loan rates compared to a regular bank.

Microloans

Microloans are designed to assist small firms that are facing difficulty obtaining finance from a bank or credit union. Normally, the sum is less than $50,000. Microloans frequently come with limits on how the money can be spent.

Community Loan Funds

Non-profit organizations that provide loans to local initiatives and develop entrepreneurship in the community are supported by community loans.

Canadian Small Business Financing Program

Small businesses and start-ups with less than $10 million in gross revenue can apply for financing for land improvements, renovations, and equipment through the Canada small business loan program, which is run in partnership with financial institutions.

Lenders On The Internet

Alternatives to typical bank loans include online lenders. Online lenders like iCapital differ from banks in terms of measuring creditworthiness, their approach to processing a small business loan, and the technology used.

Why iCapital is Your Choice Lender

iCapital is one of the most trusted online lenders in Canada. We help you secure loans quickly without having to go through cumbersome and time-consuming paperwork. We’re also here for companies in industries unable to secure a loan from a bank or those rejected on the grounds of credit score.
Since 2007, we’ve been committed to helping small businesses expand their business with easy loan approvals within 48 hours. Our technology and security are top-notch, keeping your money and account safe from hackers. We follow a 100% automated process that eliminates the scope of any human errors. Contact iCapital at (877) 251-7171 today to know more about small business loans and how we can help you secure a loan quickly.

Customer retention best practices for your small business

In 2023, the business landscape will be more dynamic, with constantly evolving trends and changing customer demands. You can keep your customers engaged and returning for more with the right strategies. Here are some invaluable customer retention best practices to help you stand out from the crowd and keep your customers coming back for more:

Embrace Omnichannel Sales

The pandemic accelerated the shift to online shopping, and customers are now more comfortable than ever buying online. This means providing a seamless experience across all channels, from your website to social media platforms, mobile apps, and online marketplaces. Investing in innovative technologies such as AI and automation can deliver personalized and efficient products that set you apart from the competition.

Use Social Media to Build Relationships

Social media is a powerful tool for building relationships with your customers. You must use social media to build a community around your brand, engage with your customers, and create meaningful relationships. By actively listening to your customers and responding to their queries, feedback, and concerns, you can show that you care and establish trust. Furthermore, social media allows you to showcase your brand's unique personality and values, which can help you stand out from the competition. Sharing customer stories, testimonials, and reviews can also be an effective way to humanize your brand and build social proof.

Leverage Data Analytics

Data analytics can help you understand your customers better and identify opportunities to improve customer retention. You can identify opportunities to improve customer retention and create personalized experiences by tracking customer behaviour, preferences, and feedback. Investing in data analytics tools can help you make data-driven decisions and optimize your marketing and sales strategies to meet your needs.

Be Transparent and Authentic

Customers are increasingly demanding transparency and authenticity from the brands they do business with. Customers are looking for open and honest businesses about their practices, policies, and values. This requires being transparent about pricing, shipping, and returns policies and using authentic and inclusive marketing messages. Doing so can build trust with your customers, which is essential for long-term loyalty. Customers are also more likely to recommend businesses they perceive as transparent and authentic.

Focus on Customer Experience

Customer experience will be a major differentiator for small businesses. As a small business owner, providing exceptional customer experience across all touchpoints should be a top priority. This means investing in customer service training for your staff, optimizing your website for usability, and gathering customer feedback to improve your products and services continuously.

These customer retention best practices can help your small business to stand out from the competition, improve customer loyalty, and grow your business. By embracing omnichannel sales, using social media to build relationships, leveraging data analytics, being transparent and authentic, and focusing on customer experience, you can create a loyal customer base that will continue to do business with you and recommend your brand to others.

Sales ,Marketing ,Management

7 ways how AI empowers small businesses to achieve more in less time

What is artificial intelligence (AI)?

AI is a revolutionary technology that enables SMBs to automate tasks, predict trends, forecast demand, improve decision-making, streamline operations, and scale up. With advanced AI models like Stable Diffusion, DALL-E 2, and GPT-3, and the emergence of AI-powered products like ChatGPT and GitHub Copilot, we can now utilize technology that was once considered exclusively human.

In this blog, we will explore the benefits of AI for SMBs and how you can gain a competitive advantage in your respective markets by optimizing operations and maximizing output with minimal resources.

1. Automating Repetitive Tasks

AI-powered tools can automate time-consuming tasks such as data entry, invoicing, and email management. This frees up valuable resources that can be redirected toward high-value activities, such as strategic planning, customer engagement, and product development.

2. Improving Customer Experience

Chatbots and virtual assistants can provide customers with quick and accurate responses to their inquiries, improving their overall experience with your business. Additionally, it can analyze customer behaviour and preferences to personalize marketing efforts and provide targeted recommendations, further enhancing the customer experience.

3. Improving Decision-Making

SMBs are frequently required to make critical decisions that impact the trajectory of their business. AI-powered tools can enhance your decision-making by providing real-time insights and analytics. For example, an AI tool can analyze sales data and identify trends, empowering owners to make data-driven pricing, promotions, and product development decisions.

4. Predicting Trends and Forecasting Demand

AI-powered tools can help you predict trends and forecast demand. By analyzing data from various sources, including social media, sales history, and online reviews, AI has allowed you to identify emerging trends and help your SMB adjust strategies accordingly.

5. Enhancing Marketing Efforts

AI can also help enhance marketing efforts. Analyzing customer data that will identify the target audience, create personalized marketing campaigns, and predict which marketing strategies will most likely be effective.

6. Enhancing Cybersecurity

With the rise of cyber threats, SMBs can use AI to strengthen their cybersecurity measures. AI-powered tools can detect and prevent cyber attacks, identify vulnerabilities in systems and networks, and provide real-time alerts to potential threats. This helps SMBs protect their sensitive information and prevent costly data breaches.

7. Improving Decision Making

Lastly, AI can help improve decision-making by providing data-driven insights. AI-powered tools can assist you, and your managers in making well-informed decisions regarding crucial aspects such as hiring, resource allocation, product development, and pricing.

Marketing ,Management

What is a bad debt expense, and how to calculate it?

What is a bad debt expense?

When a buyer doesn’t pay in full, you can make a note of the amount you’re unable to recover in your business’ financial record. This is a bad debt expense.

Unfortunately, dealing with non-paying buyers is a common problem among small- and medium-sized businesses in Canada. The best way to protect yourself is to accurately record your losses to contain the damage.

Why should I keep track of bad debt expenses?

When you invoice a buyer for their purchase, it’s recorded as a sale in your books. If you’re not paid for that transaction, your overall revenue is actually less than indicated by your accounts–and you have to pay tax on your revenue. When you record unrecovered income as a bad debt expense, you officially remove all or part of that sale from your revenue which means that you won’t have to pay tax on it. This is entirely fair and legal–you don’t pay tax on income earnings you never received.

How to calculate your bad debt expenses

There are two ways to calculate bad debt expenses: the direct write-off method and the allowance method.

With the direct write-off method, you simply charge the amount of the unpaid invoice to the bad debt expense. This removes the amount from your accounts receivable, reducing your taxable income. This is the simpler method and the most commonly used by Canadian businesses.

Accounting

5 Strategies for Growing your Business

What can I do to start developing a plan for growth?

Deciding to grow your business is a big step, so take a moment to congratulate yourself. Now, let’s get to work. The first thing to do is to develop a plan, and these five strategies can help.

1. Take care of your cash flow

Just for everyday operations, businesses need to have a steady flow of capital coming in and going out, but the importance of your cash flow intensifies when you’re planning to expand.

Survey your income and expense reports to determine your current cash flow, and identify trends so you can estimate how much you’ll have in the future. Don’t stop there. Make sure that you return to this information regularly to ensure you remain on the right path.

Should you find yourself in a cash flow crunch, you can consider a business line of credit so you can continue to take care of your responsibilities. Alternatively, you can take out a small business loan.

2. Invest in marketing and sales

It’s common for sales and marketing costs to fall to the bottom of a small business’ priority list, but they’re an absolutely crucial investment, especially if you’re expanding. Bear in mind that marketing and sales strategies and tactics can be tailored to your business’ unique needs, so you’ve got a variety of options to choose from–all with different budgets. Consider your audience, sales goals, and business forecast to build regular (think monthly) marketing efforts into your long-term plan. Marketing your business is an investment in its success.

3. Attend to your core audience while attracting new customers

Expansion often involves courting new customers, weather from different market segments or simply additional regions. It’s important that during the growth process resources and attention aren’t stolen from your core customers. They’re the ones who got you here, after all.

One way to give everyone the attention they deserve is to break your audience (and marketing dollars) into distinct segments and sell each according to their wants. Be open to different configurations. For example, depending on the situation you might want to serve everyone under a single brand, or develop distinct brands for different segments.

4. Confirm your supply

Few things can turn customers away faster than hearing you don’t have the products or services they need. Supply chain issues and slow delivery since the pandemic have put an increasing number of businesses in a precarious position when it comes to meeting customer demands, so your expansion plans should include the establishment of relationships with multiple reliable suppliers. Your efforts in advance demonstrate good business practices and respect for your customers. Plus, positive relationships with multiple suppliers can help you with your expansion goals.

5. Ensure quality and consistency

It should go without saying, but the last thing you want to happen when you expand is to have your quality or customer experience decline. Plan against this by establishing production, operations, and customer service standards. .

You have a better chance of expanding successfully if you plan carefully in advance. Attend to your finances, marketing, suppliers, and customers in advance to make sure you’re growing on a solid foundation.

Speak to an iCapital advisor about small business loans or lines of credit to ensure steady cash flow during your expansion process.

Marketing ,Accounting ,Management