We’ve all heard of the expression ‘ fear of the unknown ‘… and when it comes to talking to clients about business loan finance, commercial banking, and the financing of the right loans and financial vehicles for their business that phrase seems somehow … quite appropriate .

So why does the Canadian business manager, if not fear, have a healthy amount of trepidation around what’s required in a financing request … scratch that… a SUCCESSFUL financing request . Let’s examine some basics, including the ever feared and despised personal guarantee!

The majority of businesses in Canada in the small and medium enterprise sector generally are required to have all significant owners of the business personally guarantee financing. Larger more established corporations and public companies in general are omitted from that requirement.

Naturally the putting up of personal assets as a guarantee for a business loan or other type of financing weighs heavily on the business owner. And hey … didn’t we incorporate our company just to avoid this and other liabilities?!

Is there any consolation we can provide the business owner on this somewhat testy issue? One is of course that, not known to all, personal guarantees are somewhat negotiable. In certain cases where the lender wants your business bad enough, from a credit quality perspective the PG can be waived in its entirety.

Oh, and by the way, you could also spend the time seeking out (or speak to a trusted, credible and experienced Canadian business financing advisor) finance firms that place little or no emphasis on the guarantee of the owners from a personal perspective. Furthermore, and we don’t mean to sound flip, but what in fact are you worried about if you have the business assets and confidence in your business around this issue of default and personal liability .

A final point on the guarantees of owners – they can be modified by negotiation in many creative manners, i.e. limited guarantees, guarantees subject to certain valuations, etc.

Are there other key elements of any financing proposal or business loan request that can make or break your success in Canadian business financing. Other key areas you should carefully address are the ability to demonstrate and provide:

Background of your company and management experience

Up to date financials – by the way that includes balance sheets that balance

Aged lists of receivables and payables

Business bank statements – (lenders like to see the in’s and outs!)

Business plan – if applicable

Can we forgive the Canadian business owner/finance manager for viewing the Canadian business financing landscape as a minefield? Yes we can, for all of the reasons we’ve talked about and more.

But with the right financing advice and information you can eliminate a huge amount of the ‘ fear ‘ that comes with access to the proper financing of your business. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist your with your business loan finance concerns.