Working Capital
If your company has been in existence for at least two years, you can be eligible for a working capital loan of up to $100,000. The money from this loan may be used toward marketing, recruiting new employees, or any other necessity your company may have.
Working capital loans offer short-term funding to assist businesses fill in financial gaps, such as the time between collecting accounts receivable and paying accounts payable, or in a seasonal industry, to fill in times of low activity (they are repaid during periods of high activity).
Loans for working capital are obtained in one single payment. Since they fall under the demand loan category, the lender has the right to “demand” repayment at any moment.
Working capital loans are virtually always secured with a company’s assets serving as collateral for repayment. The ability of the borrower to make debt payments determines the repayment structure, which includes the interest rate, duration, and amortization time, with the loan’s security playing a secondary role. The loan’s payment periods and interest rate are often lengthier if real estate or land is used as collateral.
Loan terms:
- up to 8 years to repay the loan;
- up to 24 months principal postponement at the start of the loan.
Industries That Qualify for a working capital loan in Ontario
In reality, practically any sector in Ontario may be eligible for a business loan, including but not limited to:
- Construction and builder companies
- Medical supply warehouses, and distributors
- Medical facilities, clinics, and practices
- Hotels, motels, and B&B locations
- Vacation rental locations
- Restaurants, bars, bakeries, and coffee shops
- Farm equipment and supply retailers
- Vegetable, fruit, grain, and livestock farming
- Town Car, limousine, shuttle, and other transportation-related services
- Plumbing, electrician, and home/industrial repair businesses of any kind
- Pet stores, pet groomers, and other animal-related businesses
- Wellness spas
- Hair, nail, and beauty salons
Eligibility:
- be Canadian citizens or permanent residents;
- have reached the age of majority in the province or territory in which they live;
- have a business that has been in operations for at least 24 months.
Frequently asked questions
How long does working capital financing last?
Working capital finance is a short-term loan. It Short-term loans are used for working capital. Managing a business's operating expenses is where it is most often used. The loans are typically provided for a year. The lender's requirements determine the criteria.
What advantages does working capital financing offer?
The main advantage for borrowers is that it expedites finance processing by minimizing changes in company operations' cash flows. Flexible repayment options are available for the working capital instruments.
How much is the interest rate on a working capital loan?
The interest rate is determined by the total amount of the money, the borrower's creditworthiness, and the borrower's history of on-time payments. As a result, the interest varies across cases and lenders from 7% to 11%.
Which banks provide a working capital loan?
The working capital facilities are offered by banks, BDCs, and other financial organizations. The eligibility, periods of repayment, and required papers vary depending on the individual lenders. We aid in bridging the gap between competent lenders and qualified borrowers.
Can I get a working capital loan with bad credit?
In Ontario, banks and other conventional financial institutions often demand a credit score of at least 650, if not more. However, alternative lenders have more lenient requirements for loans. Instead of considering your credit score, they often rely their approval on the monthly sales of your company.
