{"id":60723,"date":"2023-01-26T23:53:22","date_gmt":"2023-01-26T23:53:22","guid":{"rendered":"https:\/\/we-bc.ca\/?p=60723"},"modified":"2023-02-20T18:02:28","modified_gmt":"2023-02-20T18:02:28","slug":"business-loan-eligibility-blog","status":"publish","type":"post","link":"https:\/\/news.we-bc.ca\/en\/business-loan-eligibility-blog\/","title":{"rendered":"Determining Your Eligibility for a Business Loan"},"content":{"rendered":"\n

Whether you are starting a new business from scratch or expanding an existing one, many entrepreneurs reach a time when they look into securing a business loan.<\/p>\n\n\n\n

 If you\u2019re new to the world of business lending, it can feel intimidating. How do you start? Can you just walk into a bank and ask for money? Well, sometimes! But before you do that, it\u2019s a good idea to understand what lenders are looking for, and what programs you might be eligible for.  <\/p>\n\n\n\n

In this blog post, I will go over some key considerations to think about so you can take this important step with more confidence.<\/p>\n\n\n\n

Not all lenders are created equal<\/strong><\/h2>\n\n\n\n

Let\u2019s start by going over the different types of business lenders. At a high level, there are three different categories of lenders, and lenders within each category generally take a similar approach to make lending decisions.<\/p>\n\n\n\n

1. Banks and Other Financial Institutions<\/strong><\/h3>\n\n\n\n

This includes Canada\u2019s \u2018big\u2019\u00a0 Schedule I Institutions (RBC, CIBC, and the like), as well as credit unions.\u00a0 These lenders are usually formula lenders<\/em> which means they will look at the hard numbers of your business and personal finances to make their decision; However, some have special programs for equity-seeking groups that are more flexible. These lenders can offer fixed-length term loans or more flexible products like lines of credit.<\/p>\n\n\n\n

2. Private Lenders<\/strong><\/h3>\n\n\n\n

This category includes a diverse array of private companies (sometimes called alternative lenders) that lend to businesses. They often focus on specific financing products (for example, inventory financing, receivables factoring, emergency short-term loans, or debt consolidation),. Like banks, private lenders are formula lenders. They generally can\u2019t lend as much as a bank, but can usually get you a decision quickly and may have a streamlined application process. If you\u2019re thinking of applying with a private lender it is very important to understand their terms and conditions, as some lenders have extremely high interest rates and fees<\/a>, and may have strict lending terms. <\/p>\n\n\n\n

3. Developmental Lenders<\/strong><\/h3>\n\n\n\n

These are lenders that have been set up by governments to drive economic development and support businesses that have trouble accessing traditional lending from banks. In British Columbia, developmental lenders include WeBC<\/a>, Community Futures<\/a>, Business Development Bank of Canada (BDC)<\/a>, Futurpreneur<\/a>, and Aboriginal Financial Institutions<\/a>. Developmental lenders usually have a holistic approach to lending, and do not make their decisions based solely on a formula. While developmental lenders are set up to help entrepreneurs, they do have eligibility criteria they must follow, and they may need more time and documentation to make lending decisions.<\/p>\n\n\n\n

Eligibility Considerations<\/strong><\/h2>\n\n\n\n

All lenders will have slightly different lending criteria, but here are some questions to ask yourself to understand how you will match up with common eligibility considerations.<\/p>\n\n\n\n

1. Financial Considerations<\/strong><\/h3>\n\n\n\n