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.

 

 

Read Also

Kickstart Your Small Business Marketing for 2025

The new year brings fresh opportunities to innovate and elevate your small business marketing. As the holiday season becomes a memory, it’s time to pivot your focus toward long-term strategies that will drive success throughout 2025. Whether it’s adopting cutting-edge tools or connecting more deeply with your audience, these actionable insights will ensure your marketing efforts stay ahead of the curve.

1. Build on Holiday Momentum with Retargeting Campaigns

The holiday season introduced new customers to your brand—don’t let that engagement fade! Use retargeting ads to reconnect with holiday shoppers. Showcase complementary products or services they didn’t purchase and exclusive “New Year” offers to bring them back.

2. Embrace AI for Personalized Marketing

Artificial intelligence continues to transform how small businesses engage with customers. From predictive analytics to dynamic content recommendations, AI helps deliver hyper-personalized experiences. Consider tools like AI-driven email campaigns or chatbots to enhance customer interactions and stand out in a crowded market.

3. Refresh Your Digital Presence

Start the year strong by giving your digital channels a makeover. Update your website with new visuals, optimize navigation for user experience, and refine your SEO strategy with 2025’s trending keywords. Ensure your site is mobile-friendly and fast to keep customers engaged and ready to convert.

4. Explore New Platforms and Trends

Social media remains a powerful marketing tool, but 2025 requires more creativity. Platforms like TikTok and the metaverse offer fresh ways to connect with tech-savvy audiences. Experiment with short-form video content, AR/VR experiences, or even NFTs to create memorable interactions with your brand.

5. Double Down on Customer Trust

Data privacy is front and center in 2025. Be transparent about how you collect and use customer information. Offer clear privacy options and emphasize your commitment to protecting their data. This builds trust and positions your business as a leader in ethical marketing.

6. Prioritize Local SEO

Local SEO remains a cornerstone for small businesses in a world dominated by digital-first strategies. Optimize your Google My Business profile, collect reviews, and use geo-targeted ads to reach customers in your area. Hosting local events or offering community-focused promotions can also drive foot traffic.

7. Lean Into Video Marketing

Video content continues to dominate consumer preferences. Use videos to tell your brand story, showcase products in action, or highlight customer testimonials. Consider live-streaming events or tutorials to connect with your audience in real time and build deeper engagement.

8. Implement Interactive Content

Interactive marketing is a powerful way to keep customers engaged. Quizzes, polls, and augmented reality tools invite participation and make your content more memorable. For example, a quiz like “Which Product Matches Your New Year’s Goals?” can drive traffic and generate leads.

9. Adopt Growth Marketing Strategies

Growth marketing is all about looking at the bigger picture. Beyond acquiring new customers, focus on retaining them and increasing lifetime value through upselling, cross-selling, and loyalty programs. Tracking customer feedback and behaviour is key to refining your approach.

 

As the new year unfolds, seize the opportunity to innovate and connect with your audience meaningfully. By implementing these strategies, your small business will thrive, building on the success of the holiday season and paving the way for sustainable growth. Start today, and make this year your best yet!

 

Marketing

Leverage Location-Based Marketing to Drive Your Business This Holiday Season

As the holiday season approaches, small businesses have a prime opportunity to connect with local customers through location-based marketing. Targeting customers in your area can effectively boost foot traffic, build community presence, and keep your business top-of-mind during this bustling season. With the power of location-based marketing, you can drive more sales and enjoy a stress-free, profitable holiday season.

At iCapital, we understand that Canadian businesses thrive on community connections and efficient strategies. Here’s how to use location-based marketing to make the most of the season and grow your business.

Capture Attention with Geo-Targeted Ads

Location-based marketing starts with targeted ads designed to reach customers in your area. Platforms like Google Ads and Facebook Ads allow you to set specific geographic boundaries for your campaigns. This ensures that your ads are seen by people in your vicinity who are most likely to visit your store or use your services.

During the holidays, highlight seasonal promotions, special events, or limited-time offers. Show local customers what they’re missing out on by showcasing your products or services that make holiday shopping more accessible and enjoyable.

Create Localized Offers and Discounts

Incentivize local customers to visit your business by offering exclusive deals and discounts based on location. Send push notifications or SMS messages to inform nearby customers about in-store discounts or flash sales. For example, a “Holiday Cheer Discount” for customers within a certain radius can motivate them to stop by and explore your offerings.

Remember, the holiday season is fast-paced. Time-sensitive, location-based deals create a sense of urgency that can encourage quick visits and conversions.

Use Google My Business to Enhance Your Local Presence

Your Google My Business (GMB) profile is an essential tool for location-based marketing. Keep your profile up-to-date with your latest holiday hours, contact information, and special events or offerings. Positive reviews on GMB can also influence local customers, as they’re more likely to choose a business with a solid reputation in their area.

Add engaging photos of your holiday displays or featured products. Customers can feel the festive spirit and be inspired to visit in person. A well-maintained GMB profile improves your online presence and builds trust and accessibility for nearby customers.

Partner with Local Influencers for Greater Reach

Tap into the influence of local personalities to amplify your reach. Partner with influencers who resonate with your brand and are active in your community. A well-known local influencer endorsing your business can introduce you to a broader audience and add a layer of credibility, encouraging local customers to visit.

For example, a local influencer can showcase your holiday gift selection or feature an in-store event on social media, drawing in customers who trust their recommendations.

Encourage Customer Check-Ins and Social Sharing

Leverage the power of customer engagement by encouraging check-ins and social media shares. Offer incentives for customers who tag your business in holiday shopping posts or check in on platforms like Facebook and Instagram. These check-ins increase your visibility and create organic word-of-mouth marketing as their followers see your business pop up on their feeds.

Adding a seasonal hashtag and festive backdrop in-store can make this experience even more enticing. When your customers share their holiday shopping with you, they promote your business to their friends and family—right when they’re likely making holiday purchasing decisions.

Drive Success This Holiday Season with Location-Based Marketing and Stress-Free Financing from iCapital

With the right strategies, location-based marketing can transform the holiday season into a period of growth and opportunity. Whether you’re a local shop or an expanding business, these tips will help you reach your nearby customers and make this holiday season one to remember.

If you want to enhance your marketing efforts or prepare for the seasonal surge, iCapital offers stress-free financing solutions tailored to Canadian businesses. Contact us today to learn more about how we can support your growth, allowing you to focus on connecting with customers and building your business this holiday season.

 

Marketing

7 Tips to Avoid Spoiled Inventory

For restaurant owners, managing inventory is crucial not only for profitability but also for ensuring the safety and quality of products. Spoiled inventory can lead to financial losses, customer dissatisfaction, and potential health risks. By implementing effective inventory management strategies, you can minimize waste and maintain a high standard of food quality.

Understanding Inventory Management

Inventory management involves tracking, storing, and controlling the movement of goods within a business. It helps businesses optimize operations, reduce costs, and improve customer satisfaction. 

Key Tips to Avoid Spoiled Inventory

  • Implement a Robust Inventory Management System:

  • Use a dedicated inventory management software or system to track stock levels, expiration dates, and product locations.

  • Conduct regular stock counts to verify accuracy and identify discrepancies.

Follow the FIFO (First In, First Out) Principle:

  • Rotate your inventory to ensure that older products are used or sold before they expire.

  • Store products in a way that facilitates FIFO, such as placing newer items behind older ones.

Set Inventory Par Levels:

  • Establish minimum stock levels for each product to avoid running out while minimizing excess inventory.

  • Regularly review and adjust par levels based on demand and sales patterns.

Organize Your Storage Space:

  • Label shelves and storage areas clearly to prevent misplacement and confusion.

  • Maintain proper temperature and humidity levels for different product categories.

  • Regularly inspect storage areas for signs of spoilage or damage.

Build Strong Relationships with Suppliers:

  • Negotiate flexible delivery schedules and order quantities to minimize excess inventory.

  • Communicate any changes in demand or product requirements promptly.

  • Consider collaborating with suppliers on joint promotions or waste reduction initiatives.

Conduct Regular Inspections:

  • Inspect incoming shipments for damage, spoilage, or quality issues.

  • Perform periodic checks on stored inventory to identify products nearing expiration.

  • Take immediate action to address any problems or concerns.

Train Staff on Inventory Management:

  • Educate employees about the importance of proper inventory handling and storage.

  • Provide training on how to use inventory management systems and follow company procedures.

  • Encourage staff to report any issues or concerns related to inventory.

By implementing these strategies, food businesses can significantly reduce food waste, improve profitability, and ensure the safety and quality of their products. Effective inventory management is a vital component of successful food operations.

Management

Simple Strategies to Manage Your Seasonal Inventory

When managing seasonal inventory in the retail sector, careful planning is critical. Many retailers find themselves in a balancing act between avoiding leftover inventory and also empty shelves. To escape heavy markdowns at the end of a season and potential cash-flow problems, follow these strategies for profitable results.

Planning for Success

  • Start Early: Begin planning well in advance of each season, reviewing last year's sales data to identify trends and patterns.
  • Create a Detailed Plan: Organize your information into a comprehensive plan, breaking down each season's data by category or time frame. This will help you visualize your inventory needs and make informed decisions.
  • Leverage Data Analytics: Utilize data analytics tools to gain deeper insights into customer behaviour, demand forecasting, and inventory performance. This can help you optimize your stock levels and avoid overstocking or understocking.

Timing is Everything

  • Anticipate Demand: Forecast demand based on historical sales data, market trends, and upcoming events or promotions. This will help you determine the optimal time to order and replenish inventory.
  • Avoid Stockouts: Ensure you have sufficient inventory to meet customer demand, especially during peak seasons. Stockouts can lead to lost sales and customer dissatisfaction.
  • Stagger Shipments: Consider staggering shipments throughout the season to avoid excess inventory and reduce the risk of markdowns.

Repeat Success

  • Identify Best Sellers: Analyze your sales data to identify your top-selling items for each season. Prioritize these items for replenishment and ensure they are always in stock.
  • Optimize Reordering: Implement a system for reordering popular items based on sales velocity and demand forecasting. This will help you maintain optimal stock levels and avoid stockouts.
  • Monitor Inventory Levels: Monitor your inventory levels to ensure you have enough stock to meet demand without overstocking. Use inventory management software or tools to track stock levels and identify potential issues.

Making the Most of Seasonal Cash Injection

If you've secured a seasonal business loan to support your inventory needs, here are some practical ways to use the funds:

  • Inventory Investment: Allocate funds to purchase additional inventory, particularly for high-demand products or new offerings.
  • Marketing and Promotions: Invest in marketing campaigns to drive sales and increase brand awareness during your peak season.
  • Staffing and Training: If needed, hire additional staff or provide training to ensure efficient operations and meet increased customer demand.
  • Equipment Upgrades: Consider upgrading equipment or technology to improve efficiency, productivity, and customer experience.
  • Debt Reduction: If applicable, use a portion of the loan to reduce existing debt and improve your financial health.

Marketing and Customer Engagement

  • Leverage Seasonal Marketing: Create targeted marketing campaigns to promote seasonal products and drive sales. Utilize email marketing, social media, and in-store promotions to reach your customers.
  • Engage with Customers: Seek customer feedback to understand their preferences and adjust your inventory strategy accordingly. Offer personalized recommendations and provide excellent customer service to encourage repeat purchases.

By following these strategies and staying informed about market trends, you can effectively manage your seasonal inventory, minimize waste, and maximize profitability. Remember, consistent planning, data-driven decision-making, and a focus on customer satisfaction are essential for success in the retail industry. 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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