Flock Free Nation

No nonsense information on small business.

Oct 29, 2012 - 2 minute read - Comments - funding government

Understanding The Saskatchewan Small Business Loans Association (SBLA) Program

The SBLA program is a provincial government program that is administered through local community-run loan associations. An individual business can borrow up to $20,000 to start or expand a business.

Eligible Borrowers

The program is meant to provide financing to new businesses or existing businesses that want to expand. It is meant to fill the funding gap to finance businesses that traditional banks or credit unions might find too risky. The program’s goal is to help entrepreneurs who might not otherwise find financing to start their businesses.

Eligible Loan Purposes

  • equipment
  • renovations
  • start-up inventory

Non-eligible Loan Purposes

  • direct farming
  • mining or oil extraction
  • residential real estate
  • multi-level marketing
  • operating expenses
  • repayment of existing debt

Loan Terms

The local community loan associate will set the interest rate but the maximum rate is capped at 10 percent. Loans are granted for a two to five year term.

Loan Application Process

Entrepreneurs can contact either their local community loan association or the SBLA program office at Enterprise Saskatchewan at sbla@enterprisesask.ca or 306–787–4707. Prospective borrowers will be required to provide the following information to their local community loan association, which will then review the material and make a lending decision. Decisions are partly based on the number of jobs the business will bring to the community and the services the business will provide.

Required Information

The SBLA is a good option for some borrowers. It can provide seed capital that can make the difference between starting or not starting a business for many entrepreneurs. If you feel like the program might meet your needs, it’s worth giving your local association a call.

Oct 18, 2012 - 2 minute read - Comments - government

Major Changes Being Proposed to Canadian Small Business Financing Program

Industry Canada is proposing major changes to the CSBFA that would take effect April 1, 2013. The proposal is currently under a 30 day consultation period that began last Saturday.

The main changes to the current program are:

  • The maximum interest rate would increase by 0.75% to prime + 3.75% or the residential mortgage rate + 3.75%
  • Banks would be able to charge higher loan administration fees. These fees are capped under the current program.
  • The personal guarantee provided by the shareholders of a corporation could be 100% of the loan amount. Personal guarantees are limited to 25% of the total loan amount under the current program.

Industry Canada wants to make these changes because the number of loans granted under this program have dropped from 18,000 in 1999-2000 to 7,466 in 2010-2011. Banks complain that the program is difficult to administer and that they don’t make enough money on the loans. These changes are supposed to help change that and get more of these government guaranteed loans in the hands of small business owners.

The increase in the interest rate and fees will cost businesses more when they borrow under this program but that isn’t my main concern. The proposed 100% guarantee will expose the shareholders of a company to full personal liability for the loan amount. I believe that this rule change will reduce the number of entrepreneurs willing to take a chance on starting a business.

The current 25% guarantee ensures that the shareholders have “skin in the game” but that that their losses will be manageable if the business fails. The 100% guarantee would make the losses far less manageable for many people.

I’ve seen many situations where a group of small investors pool their funds and take out a CSBFA loan to start the business. One shareholder runs the business day to day and the others help out when they can because they typically work at regular jobs. Entrepreneurs like this can justify their participation if they can limit their losses to their cash investment in the company and 25% of the loan amount. Increasing this to 100% will prevent many people from starting a business in a scenario like this.

Aug 9, 2012 - 2 minute read - Comments - funding

Clarence Campeau Develops New Programs for Métis Women and Youth Entrepreneurs

The Clarence Campeau Development Fund has created the Métis Women’s Equity Program and the Métis Youth Equity Program (18-35 years old).

The Métis Women’s Equity Program

The Métis Women’s Equity Program offers equity assistance of up to 65% of project costs to a maximum of $10,000. Total project costs cannot exceed $25,000, (excluding working capital). The funds can be used to purchase an existing business, start a new business or expand or renovate an existing business.

The funds are repayable over a maximum 5 year term and are interest free. After 24 months of satisfactory repayment the client has the option to repay 75% of the remaining contribution with 25% being forgiven. Security consists of a promissory note, which means that no assets need to be pledged as collateral.

The business must be for profit and have a sound business plan. The applicant must put 5% equity into the business and the business must be 100% owned by a Saskatchewan Métis Woman.

Métis Youth Equity Program

The Métis Youth Equity Program offers equity assistance of up to 65% of project costs to a maximum of $10,000. Total project costs cannot exceed $25,000, (excluding working capital). The funds can be used to purchase an existing business, start a new business or expand or renovate an existing business.

The funds are repayable over a maximum 5 year term and are interest free. After 24 months of satisfactory repayment the client has the option to repay 75% of the remaining contribution with 25% being forgiven. Security consists of a promissory note, which means that no assets need to be pledged as collateral.

The business must be for profit and have a sound business plan. The applicant must put 5% equity into the business and the business must be 100% owned by a Saskatchewan Métis Youth

For more information, contact the Clarence Campeau Development Fund

May 2, 2012 - 1 minute read - Comments - immigration

Canada Working on Startup Visa For Immigrant Entrepreneurs

The Federal Government is going to launch consultations to develop a startup visa to attract entrepreneurs.

It is important to understand what this means in the context of the different types of entrepreneurs. Details on this startup visa are still scarce but it seems that the government will be looking for scalable startup entrepreneurs rather than the more common small business entrepreneurs that are currently accommodated under existing entrepreneurship programs.

Entrepreneurs under this program will likely need to arrange venture capital investment before immigrating. This will mean that it will only apply to entrepreneurs in industries that are capable of exponential growth, such as software.

This effort is part of a competition with other countries for top entrepreneurial talent. The United States has been making efforts towards a startup visa for some time. Currently, it appears that the bill is stalled in the legislative process.

This leaves Canada with an opportunity to gain an edge in the competition for these talented entrepreneurs. Hopefully the consultative process will move quickly and we can put a sensible policy in place to attract these entrepreneurs.