Private Business Loans in Canada

Before you start your own business in your province or anywhere in Canada, the first thing that you need to check is your financial business plan. How you going to finance your operation (unless you have your own money). In case you have two or more financing options, you have to figure out which lender or financial option you will be applying with.

Several business aspirants and business owners choose their financing options with their bank, credit union, several non-traditional lenders offer private business loan products. Continue reading if you are interested in learning the advantage and disadvantages of hiring a business loan lender in Toronto or a Private business loan lender in Oshawa.

Private Business Loan: Explained

A private business loan is the lump sum or total cash that you borrow either from a private business lender or any financial Institutions that work outside of banks and other traditional Institution. This may work the same with Traditional Lenders you may whatever funds you acquire to finance various parts of your business, then repay what you owe over time.

Bank financing is meant for you to build your organization in some way, while private business financing is often used for paying down debt this comes with several forms, includes a term loan, a line of credit, or a merchant cash advance.

All this said a private business loan can also help you:

Lease or/ purchase assets

Hire additional staff members

Invest in marketing strategies

Introduce a new product or service

Develop within a new market or area of the country

Consistently restock your inventory      

Who Are Private Business Lenders?

Private business lenders supply to the sub prime market, meaning start-up companies and borrowers who don’t have outstanding credit or strong finances overall. While every sub prime lender has their way of accepting clients, their approval restrictions are generally easier to pass than the average prime lender.

On the other hand, prime lenders like banks and credit unions have stern regulations and may only approve 20% – 40% of applicants, when it comes to business loans, which can involve significant amounts of financing. They focus more on your credit history and won’t always understand your particular industry.

Even though most private lenders can’t offer as much funding as prime institutions, they will normally focus on your ability to cohere to your repayment plan, rather than on your credit. making private lending a great option especially if you just started your business off the ground and you have minimal financial power.

Types of Business Loans Available in Canada

It is important to take note that there are several types of business financing products that you can access through a private lender in Canada, these may include  but not limited to:

What is the Term Loan?

One of the most basic forms of private financing is the term loan. This is a cash loan that’s deposited directly into your bank account, you can use it for all sorts of purposes, such as:

Purchasing properties (equipment, real estate, etc.)

Additional business capital

Expanding your Business

Purchase secondary business

One of the main benefits of a term business loan is getting fixed interest rates, which makes it easier to calculate and won’t change throughout your repayment term. This loan may come with a set repayment term of 3 to 5 years, but every lender has different specifications.

Merchant Cash Advance

A merchant cash advance gives you access to leverage a percentage of your upcoming debit and credit card sales for additional working capital. Approval rate id faster with a fixed interest rate.

Line of Credit

This type of loan is similar to the way a credit card works, a business line of credit allows you to dip into a revolving credit limit and make payments every month. , a line of credit makes a good option because you can have minimum payments to avoid defaulting or multiple payments to improve your credit.

Commercial Mortgage

a commercial mortgage is used specifically to purchase buildings, other real estate properties, and land. Similar to a regular home mortgage, it also has a longer repayment term than almost any other loan product, allowing you to pay off the property over several decades if necessary.

Asset-Based Leasing and Financing

This type of loan financing allows you to leverage assets you already own, such as equipment, vehicles, and other properties, in exchange for additional money, which is the best option if your business is new or doesn’t have great credit score.

Looking for a Private Business Loan?

Whether you’re looking for a term loan, a line of credit, or another type of business financing, Private Mortgage Canada can help you avoid the constraints of big banks and find the right private lender in your area. Contact us now.

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