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Thursday, 7th April 2022 | Small business financing Canada,Management

How large of a business loan can I afford?

Read our extensive blog to learn how much of a business loan you can successfully afford and how iCapital's finance team can help you achieve financial success.

When researching small business loans, there are a couple of things to consider. First and foremost, you must evaluate whether or not taking on debt is the best course of action for your company. For example, your company could require extra funding to alleviate the stress of a looming financial constraint during the slow season or fund a new, exciting business prospect.

The second step, which many ambitious business owners overlook, is one of the most crucial aspects of the business loans application process: determining whether or not you can genuinely afford to take out business loans in Canada.

How can entrepreneurs seeking company capital be sure they can afford to take out a small business loan and repay it on time with extra interest? Here's how to figure out if you'll be able to repay your small business loan.

Identifying what your company can afford

Suppose you're just getting started looking for business loans in Canada. In that case, you should figure out what type of monthly payments and interest rates your company can afford before diving into the process. Calculate your debt service coverage ratio to understand what you can afford when a loan is offered.

What is the maximum amount you may borrow for a business loan?

Business loans in Canada can be anywhere from $5,000 to $500,000. With iCapital, you may qualify for up to $250,000 in 48 hours with our 98% application approval rate. Personal factors like credit score, debt-to-income ratio, and business revenue influence the amount you may borrow.

If you have a well-established business, a good credit rating, and a reasonable sum of excess income, you'll be able to borrow more money. On the other hand, if you're just starting out or have a bad credit history, you'll be able to borrow less or may not qualify at all. 

How do lenders determine the loan amount?

Across the board, lenders give the most significant loan amounts to the borrowers they believe are the best qualified—in other words, the borrowers that they think will be able to repay these big loans in full and on time. All lenders want to make sure they're dealing with responsible borrowers to avoid losing money.

Banks aren't entirely stranded if borrowers default on their loans because of collateral. Any item that the borrower puts up for the lender to seize if the borrower fails on their loans—such as automobiles, equipment, real estate, accounts receivable, or cash—is considered collateral. In such an instance, the lender will attempt to collect and dispose of those assets to reclaim as much of the loan as possible. 

Other forms of collateral include blanket liens, which allow the lender to claim any tangible or intangible asset owned by the borrower, and also personal guarantees. Although most internet loans do not demand collateral, most of them do require a personal guarantee. If the business cannot pay for any reason, you must agree to repay the loan from your assets. Lenders make every effort to reduce risk. But how can banks know if a borrower is trustworthy enough to manage the most significant loan amounts? They'll look at all areas of a potential borrower's business loan application to figure that out.

Business loan application

Your company loan application may be comprised of the following items, depending on the lending institution and the type of business loan you're applying for:

  • Business loan request letter
  • Bank statements
  • Personal and business tax returns
  • Profit & loss statements
  • Balance sheets
  • Your income
  • Personal credit score
  • Business credit score
  • Annual revenue
  • Time in business
  • Business plan
  • Industry type

Banks require all of the information shown above. Banks use this information to calculate your DSCR (debt service coverage ratio), personal creditworthiness, profitability, etc. These numbers give the lender a comprehensive picture of your company's financial health. The bank will use this information to determine the amount of money it will loan your business.

Ways to qualify for more funds

Here are a few methods to qualify for a higher loan—from preparing for government-backed financing to make a significant down payment:

  • Collateralize the situation: If you put up collateral to ensure your payments, you'll be able to acquire a bigger loan. Your home, automobile, or company equipment are all examples of assets.
  • Don't forget to make a down payment: If your lender sees that you have the capacity to save money and commit to your business, you may be able to borrow more with a higher down payment.
  • Pay debts first: If you enter your loan arrangement with a lesser amount of previous personal and commercial debt, you may be able to borrow more money.
  • Boost your credit rating. The higher your credit score, the less of a perceived risk you are to the lender, and the more money they may be willing to lend you.
  • Wait till your company is more established before making a decision: Once your firm has been active for a time, and your income has increased, you may be eligible for extra money.

Apply for a business loan with iCapital

The amount offered by business lenders and the amount you can borrow is two separate figures. However, to prevent taking on more debt than required, you should concentrate on how much you truly need to borrow for your business.

With iCapital's complete guide to business loans, you can borrow the right amount of money and gain access to it fairly quickly through an easy application process. Contact iCapital at 1.877.251.7171 to apply for a business loan and get the funds you need in 48 hours.

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How Your Company Structure Can Save You Money

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Management

Wages: What Should You Pay Your Employees?

Paying your team fairly is more than a cost of doing business it is an investment in long-term growth. This guide explores how to determine the proper wages for your employees, their impact on retention and morale, and why getting it right is beneficial for your business. For Canadian small business owners, setting wages can feel like a balancing act. You want to attract and retain great people, but you also need to stay profitable and plan. Whether you are hiring your first employee or reviewing your team’s compensation, having a thoughtful wage strategy is key. At iCapital, we help small businesses grow sustainably. When the bank is not an option, we offer flexible financing that enables Canadian employers to cover payroll, invest in talent, and remain competitive. Why Wages Matter More Than You Think Wages are not just numbers on a paycheque; they are one of the biggest influences on employee satisfaction, performance, and loyalty. Underpaying can lead to high turnover and low morale. Overpaying without planning can strain your cash flow. Setting the right wage helps you: - Attract skilled and motivated candidates - Reduce turnover and training costs - Improve team morale and productivity - Build a reputation as a fair and competitive employer When you pay people well and on time, you build trust and that trust fuels long-term business success. What Factors Should You Consider? There is no one-size-fits-all answer when it comes to wages. The right number depends on your industry, location, and the role you are hiring for. Here are a few key factors to consider: - Industry standards: Research what similar businesses are paying for the same role. Online job boards, government wage reports, and industry associations are great places to start. - Cost of living: Wages should reflect what it takes to live in your region. This is especially important if you want to attract local talent. - Experience and skill level: A candidate’s background can influence what is fair to offer. Be clear about expectations and how experience affects pay. - Your budget: Understand your numbers before committing to a wage. This includes payroll taxes, benefits, and any seasonal fluctuations in your cash flow. - Value to the business: What kind of impact will this role have on your bottom line? Someone in a revenue-generating or customer-facing role may justify a higher wage based on their contribution. Hourly vs Salary: Which One Makes Sense? Choosing between hourly and salaried pay often depends on the type of work and the structure of your business. - Hourly pay is common for part-time, seasonal, or shift-based roles. It offers flexibility but may involve more administrative tracking. - Salaried pay provides consistency and is better suited for full-time roles with ongoing responsibilities. Both can work well, it just depends on what fits your team’s needs and how your operations are set up. What About Raises? Review wages regularly. A good rule of thumb is to assess compensation at least once a year. Raises can be based on performance, inflation, or increased responsibilities. Offering structured raises can: - Encourage long-term retention - Motivate performance and goal setting - Help you stay competitive in your market Even if you cannot offer significant raises, slight increases or non-monetary perks can still show appreciation. Avoiding Common Wage Mistakes Paying your team fairly is a powerful strategy, but small missteps can have a big impact. Here are a few mistakes to watch for: - Guessing instead of researching - Delaying payroll or mismanaging cash flow - Not factoring in taxes, benefits, or overtime - Assuming employees will stay loyal without reviews or raises The proper pay structure supports your business and your team, it is worth getting right from the start Your team is one of your most valuable assets. Paying them fairly—and on time—is a decision that builds loyalty, trust, and long-term results. Whether you are hiring or reviewing wages, take the time to understand what is fair, competitive, and sustainable for your business. With the right plan and support, you can create a workplace where people want to stay and grow.

Accounting ,Management

Measuring the Value of Your Small Business Customers

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Customer lifetime value, or CLV, is a measure of how much revenue a customer is expected to generate for your business over the entire time they do business with you. It provides a clearer picture of which customers bring the most value and helps you focus on those who consistently return. A simple way to estimate CLV is: Average purchase value × Purchase frequency × Customer lifespan = CLV This formula can be customized based on your business type, but it serves as a useful starting point for small businesses across various industries. Why Measuring CLV Matters for Small Businesses Not all customers are equal. Some individuals only buy once, while others return regularly and refer friends and family. Understanding the value of different customer types helps you: - Make smarter marketing decisions - Increase retention with targeted offers - Predict revenue more accurately - Justify customer acquisition costs - Focus on long-term relationships, not just one-time sales For example, if you run a landscaping company and you know a long-term client books seasonal services each year, you may invest more in loyalty rewards or personalized service to keep them coming back. How to Measure Customer Value Effectively Start by gathering data. Even simple records, such as purchase history, time between visits, and average order value, can help you understand trends. Here are a few steps to guide the process: - Segment your customers: Group them into categories: new, returning, high spenders, infrequent buyers. This gives you a clearer view of who your top customers are. - Look beyond the sale: Customer value includes more than revenue. Consider referrals, reviews, and brand advocacy. 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Once you know who your most valuable customers are, consider strategies to increase their lifetime value: - Offer loyalty programs or VIP perks - Provide personalized recommendations based on past purchases - Send regular email updates or promotions - Ask for feedback and act on it - Recognize milestones like birthdays or anniversaries Building strong relationships can turn a single transaction into years of repeat business. Using Customer Value to Guide Business Decisions CLV is not just a financial metric. It is a compass. It can guide: - Budget planning: Invest more in high-performing customer segments - Marketing: Tailor campaigns to your most profitable groups - Service upgrades: Focus efforts where retention is highest - Pricing decisions: Understand how much value each customer brings to ensure your offers make sense Let’s say your restaurant sees that brunch regulars spend more annually than dinner walk-ins. That insight can help shape your menu, staffing, and promotional strategy. Using Customer Value to Guide Business Decisions CLV is not just a financial metric. It is a compass. It can guide: - Budget planning: Invest more in high-performing customer segments - Marketing: Tailor campaigns to your most profitable groups - Service upgrades: Focus efforts where retention is highest - Pricing decisions: Understand how much value each customer brings to ensure your offers make sense Let’s say your restaurant sees that brunch regulars spend more annually than dinner walk-ins. That insight can help shape your menu, staffing, and promotional strategy. Small Business, Smart Strategy Understanding customer value helps Canadian small business owners work smarter, not harder. With a clearer picture of where your revenue comes from, you can build loyalty, boost profits, and grow sustainably—even in uncertain times. At iCapital, we support Canadian businesses that are ready to take the next step. Whether it's funding a new project, managing cash flow, or investing in customer acquisition, we're here when the bank isn't an option.

Sales

How Small Business Owners Can Take a Vacation Without Putting Growth on Hold

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