Getting a business start-up loan from your bank or credit union
You have a great business idea. All that is missing is the money to start the business. What do you do?
Short of landing a spot on CBC's Dragons' Den, you're most likely to try to get a business loan from your bank or credit union and to apply for some government program.
In this blog post, we'll take a look at how you can obtain financing from your bank or credit union to start your own business. We'll take a look at government financial assistance programs in a later blog post.
Credit is not as easy to obtain as it used to be. Lenders use stricter criteria to determine if you are eligible for a loan and they won't want to take any shortcuts with the process.
Here are some tips to help you prepare for your business loan application:
- Prepare a business plan
- Lenders want to see a strong business plan. You'll find information, templates and answers to frequently asked questions on our Developing your business plan page.
- Show that you're financially ready to start your own business
- You'll probably need to draw a small salary for the first few months or years of your new business. Lenders need to see that your personal financial situation is in good condition.
- Be ready to show documents confirming your personal income and investments.
- Put yourself in the lender's shoes
- Try to see the situation from the lender's perspective. The better you understand what the bank or credit union is looking for, the better your chances of obtaining financing.
Here are a few resources that will provide more information:
- The Business Development Bank of Canada (BDC) has an eBook called How to get a business loan for entrepreneurs seeking a loan from their bank. The guide contains:
- what your loan proposal should contain
- what your banker looks for
- common bank terms
- tips to increase your chances of success
- Another resource from the BDC is their article Obtaining financing in difficult times.
- Our Private sector financing section provides information about the various types of financing available from the private sector.