Commercial Loans

Strictly Business Loans

Information Required for Strictly Business Loans

 

  • The type of information required will vary with each application but generally includes the following:
  • A minimum of 3 years financial statements/personal income tax
  • A current personal net worth statement of the business’ principals
  • Cash flow projections
  • Business Plan
  • Appraisals (if necessary)
  • Source of down payment
  • Current listing of Accounts Receivable/Accounts Payable/Inventory

Operating Loans/Authorized Overdraft

  • Overdraft protection on the commercial chequing account to provide working capital for the business.
  • Rates may range from Prime to Prime +4.00% depending upon the security pledged and the financial strength of the borrower.
  • Interest is calculated on the daily balance for the number of days the overdraft is in effect and interest is collected monthly at the end of the month.
  • Expected to revolve, based upon the timing of the receipt of business income.

Term Loans

  • Generally used for the purchase of equipment, vehicles, machinery, etc.
  • Amortization of the loans is structured to match the life expectancy of the asset being held for security, and the cash flow.
  • Interest rate may be floating or fixed.
  • Payments are structured to correspond with cash flow of the business (generally monthly).
  • No prepayment penalties.

Commercial Mortgage Loans

  • Mortgages offer a longer amortization of up to 20 years.
  • Interest rates may be floating or fixed. 
  • Generally used for the purpose of land and buildings, although other eligible purposes would include refinancing and equity take outs.
  • Payments are structured to correspond with cash flow of the business (generally monthly).
  • Mortgages can be opened or closed.
  • Prepayment on fixed rate closed mortgages of up to 10% annually is allowed without penalty, based on the original principle balance 

Canada Small Business Financing Act (CSBFA)

  • Allows a small business to acquire a loan with less equity.
  • May finance up to 90% of the cost of the asset.
  • Security is taken in the assets financed.
  • Maximum term is 10 years or expected economic life of the assets being financed, which ever is less.
  • Interest rate may be floating at CUP + 3.0%
  • Interest rate may be fixed at no more than 3.00% over the residential mortgage rate for the applicable term.
  • These rates include a 1.25% annual administration fee payable by the lender to the government annually.
  • Borrower pays a loan application fee equal to 2% of the amount of the loan, which is paid to the government. This fee may be added to the loan balance.  
 

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