Tips to Help You Prepare for a Business Loan Application

You are captivated by your awesome business concept. All you need is the money to start your business. What to do after tapping into your personal funds? Your friends and family members could lend you some money to help you start your business, but chances are you’ll need financing from your bank or credit union.

It is not always easy to get credit. Lenders use strict criteria to determine if you qualify for a loan and they will not want to take any shortcuts in the process.

Here are some tips to help you prepare for your business loan application.

Here are some tips to help you prepare for your business loan application.

Prepare a business plan

Prepare a business plan

  • Lenders want to see a rigorous business plan. You’ll find information, templates, and answers to the most frequently asked questions about this topic on our Business Planning page.

Demonstrate that you have the means to create your business

Demonstrate that you have the means to create your business

  • It is likely that you will need a small salary during the first months or years of your new business. Lenders must make sure that your personal financial situation is in good condition.
  • Be prepared to present the potential lender with documents to support your income and personal investments.

Put yourself in the place of the lender

Put yourself in the place of the lender

  • Try to see the situation from the lender’s point of view. The more you understand what the bank or credit union is looking for, the better your chances of getting financing.


Here are some resources that will provide you with more information.

Here are some resources that will provide you with more information.

The Business Bank of Canada (BBC) has a digital book entitled How to Get a Business Loan for entrepreneurs who want to get a loan from their bank. The guide includes:

  • information on what your loan application should contain;
  • information on what bankers are looking for when considering a loan application;
  • a glossary of the most common banking terms;
  • tips to increase your chances of success.


Our Private Financing section provides information on the various types of private sector financing.

Before you go to a potential lender, make sure you’re ready and able to answer any questions about your business concept.

Business Loans – Start-up Questions

What kind of business loans are available and how does an entrepreneur make the best decision for their start-up or for a newer business? First, let’s look at the variables involved in your particular situation and give you a checklist to use:

Start-up business questions

  • Are you starting a retail or B2B / B2G business?
  • How much money do you need?
  • Do you have money to put down?
  • How is your personal credit?
  • Do you have any direct industrial experience?
  • How soon do you project to be cash positive flow
  • Will your business be an importer or an exporter?

Let’s take these financing questions one by one:

What kind of business are you starting?

What kind of business are you starting?

If you are buying and reselling goods, Invoice Factoring or Purchase Order Financing is available for startups. In addition, if you are starting a service business to provide temporary staffing, trucking service or IT services, for example, an invoice factoring company can provide pre-customer credit approval and prepare to finance at the minute you generate an invoice.


What if you are a retailer or restaurant business?

What if you are a retailer or restaurant business?

There are small business loans that include 7a, Micro Loan Program and Express Program. In addition, there are business loans based on the receipts of your available credit cards after you have been in the business for at least 6 months called Merchant Cash Advance. There are also programs to catch you $ 5000-25000 in financing for equipment or other hard assets needed to get started. Please call us for more information.


How much money do you need?

Different lenders and funding sources have different “sweet spots”. For example, we have programs for Invoice Factoring from $ 30,000 to $ 10,000,000 per month. Others may have larger programs. Our Merchant Cash Advance program can help businesses that need between $ 30,000 and $ 10,000,000.


How much money do you have to put down?


This question is more important if you are going to the traditional bank route or small business loan. Banks typically do not zero down business loans. However, an invoice factoring company is more concerned with the solvency of its customers and we advance you up to 95% of the invoiced amount.


Do you have direct experience in the industry?

Do you have direct experience in the industry?

This question is extremely critical for traditional banks and lenders by the small business (unless you buy a solid franchise). It is not important for an Invoice Factor and it is important for a Purchase Financing or Inventory Financing Company, since they want to know that you have the experience to help liquidate the financed goods if necessary.

Under the rules of the small business, we are considered lenders service providers. This is a much more extensive role than a “Packager”, whose job is to take a loan already structured and approved and prepare the documentation for submission to the government. While packers play a valuable role in the process, they do not provide the wide range of services we do.


How soon do you plan to have a positive cash flow?

How soon do you plan to have a positive cash flow?

Again, this question is extremely critical for traditional banks and lenders by the small business. Both will require a business plan with cash flow projections. Again, this is not so important for a factoring company, but an analysis of your profits for each agreement is important for an inventory financing company or PO funder, since they can only finance an agreement where their profits are sufficient .


Will your business be an importer or an exporter?


The small business has some interesting programs for export companies. If you are an Exporter, we have International Factoring Experience and can help you. If you are an Importer, we have a deep experience in Factoring and Financing PO in almost all imaginable consumer goods.

The Cash Advance


The cash advance is a cash withdrawal that is made at an automated banking machine (called ATM) via a payment card.


How to make a cash withdrawal?

cash withdrawal

To be able to make a withdrawal, you must have a payment card. This card must be inserted in the slot in the slot provided.

At this point it is necessary to indicate the type of operation to be performed. Once the operation is confirmed, the PIN will be requested

Once the personal security code has been entered and authentication has been carried out, you will be asked to confirm the amount you intend to withdraw. At this point the door will return the card and dispense the banknotes and any request receipt.


You can make cash advance withdrawals through the following cards:

cash advance

Debit cards: erroneously known in Italy as Bancomat, it is based on the principle of pay now: the expense is debited to the account together with the purchase, the sum is then deducted from one’s bank account at the time of payment.


Credit Card: defined by the pay later formula, it allows setting period of time between the purchase and the actual payment. There are different types of credit cards, based on which you can postpone the payment or installments.


Prepaid Card: it is based on the pay before formula and involves prepayment by the card holder to have it available for various purchases.


The three types of cards just mentioned fall into the category of payment cards and allow you to take advantage of two main services: payment without resorting to cash and withdrawing cash from ATMs.


The advance count: limits and costs

limits and costs

The cash withdrawal operation is free or paid based on the conditions imposed by the bank. The bank could in fact charge commissions on the transaction or provide a minimum required for the individual transaction.


Usually the withdrawal, like the top-up and deposit operations, are free for customers who use the ATMs belonging to the banking group of which they are current account holders, while, more often than not, commissions are applied when using branches of other banks or credit institutions. Bank fees for withdrawal are also applied to transactions carried out at ATMs abroad. To know the commissions applied by each individual credit institution, it is necessary to consult the information sheets made available by the credit institution itself.


Banks could also apply limits on cash withdrawals, especially for insignificant amounts that exceed the limit set by the law. Currently the maximum cash withdrawal is € 1,000 per day and € 5,000 per month. These limits imposed by the current regulations, if exceeded, could lead to an assessment of the tax authorities and even sanctions.