Entrepreneurship & Small Business

New business government loans

  • Last Updated:
  • Mar 30th, 2022 9:25 pm
[OP]
Newbie
Feb 23, 2022
3 posts

New business government loans

Can anyone who applied for and received government (on or federal) loan/grant for starting a new business (recently, since the pandemic) share their experience and the process?

I'm looking at starting a small business and getting some first hand experience would be helpful in deciding what to apply for..thank you!
2 replies
Deal Fanatic
Sep 23, 2007
5487 posts
1824 upvotes
Most likely you are thinking of the government backed loan. These would be administered through the big banks like RBC. I have not experienced applying for any grants. I believe a few grants exist but the cash they offer is likely very small.

My business applied through RBC. You start by getting connected with a bank advisor who will be your point of contact. note that getting a loan means you need to do your business banking with them.

Important thing to note. To get started you need to submit a business proposal. If you have never seen the template, then I suggest you invest in $1k or so for an accountant to draft one for you. They can make sure all the financial metrics are in line with what the bank requires. Banks (at least RBC) requires it in a certain format with certain specific information. You can try doing it yourself but you risk the bank advisor giving you the cold shoulder as he/she probably doesn't want to spend a lot of time babysitting you on how to fine tune an Excel template. Once that is submitted, someone presumably reviews the proposal for merit. They will do a background check and all that jazz to try to confirm you're not associated with a black listed business.

Banks will require you to submit personal statement of assets and liabilities. Yes you will be a PERSONAL guarantor despite it being called a government backed loan. At the time I went shopping for loans, some banks required 100% personal guarantee which in my mind defeats the purpose of it being government backed. RBC, at that time at least, only required 25% guarantee. Meaning if you ask for $100k, you will owe $25k personally if your business fails.

Once approved, the funding part is simple. But note that it was not processed as a line of credit. I had to submit invoices from vendors to the bank and the bank would pay the vendors directly. The idea is that you can only use the loan for leasehold improvements and equipments. Otherwise some people might take the money and run off to another country.

May I ask what kind of business you are aiming for? If you are running an online business for example, you likely wouldn't qualify for the program I described above.
Deal Addict
User avatar
Aug 16, 2009
1549 posts
424 upvotes
I considered applying for one of the pandemic-related loans that the government started. It was administered by BDO, Vancity, and Alterna Savings.

Ultimately decided against submitting an application due to what I felt was an overly intrusive amount of personal information required. The application required me to disclose, in addition to my business financials, all my personal holdings - registered savings (including which banks), cash, properties, assets, several prior years CRA notice of assessments. All that for a loan that is less than 20k.

I can get an unsecured LOC of up to 50k from most Canadian banks with my name, DOB and SIN. Maybe they ask for proof of employment. The funniest thing about the business loan was I think the interest rate was +10%. Thanks government, that really helps and they want you to feel grateful, like they are doing us a favour by lending out high interest rate loans - LMAO.

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