New Brunswick Small Business Loans: Get Funded

If you're looking to get a small business loan in New Brunswick, there are a few key steps you should follow to increase your chances of success. Firstly, it's important to do your research and compare different lenders to find the best fit for your needs. This includes considering factors such as interest rates, repayment terms, and funding speed. You should also evaluate your own financial situation and ensure you have a strong credit score, annual revenue, and cash flow to improve your chances of qualifying for a loan. The application process is crucial, so it's recommended to pay off any outstanding bills, research different lenders, prepare a business plan, and gather all the necessary financial information and documents. Finally, be prepared to provide collateral or a personal guarantee to secure the loan.

How to improve your credit score

To improve your credit score, you should:

• Make on-time payments. Payment history is the most important credit score factor, accounting for 35% of your FICO score. Set up autopay for at least the minimum amount and create calendar reminders to avoid missing payment deadlines.
• Pay down revolving account balances. The amount you owe makes up 30% of your FICO score. Aim to keep your credit utilisation rate as low as possible.
• Don't close your oldest account. The length of your credit history makes up 15% of your FICO score and is influenced by the age of your oldest account. Even if you no longer use your oldest credit card, consider putting a small recurring bill on it to keep it active.
• Diversify the types of credit you have. Your credit mix accounts for 10% of your FICO score. For example, someone with a mortgage loan, an auto loan, and two credit cards will have a stronger credit mix than someone with just one credit card.
• Limit new credit applications. Each hard inquiry can knock a few points off your credit score, and multiple inquiries in a short period can have a compounding negative effect. Only apply for credit when you need it.
• Dispute inaccurate information on your credit report. Inaccurate information can have a significant negative impact on your credit score. Request your free credit reports and review them for any mistakes. If you find any, follow the dispute process with the credit bureaus to have them corrected or removed.
• Become an authorised user. If you're new to credit or rebuilding your credit score, you can ask a loved one to add you as an authorised user on their credit card account. Ensure the account has a positive payment history and a low credit utilisation rate.
• Get credit for rent and utility payments. Rent-reporting services can add your on-time rent payments to your credit reports, and Experian Boost can help you get credit for eligible rent and utility payments.
• Add to your credit mix. An additional credit account in good standing may improve your credit, especially if it is a type of credit you don't already have. If you only have credit cards, consider taking out a loan, and vice versa.

How to prepare a business plan

To prepare a business plan, follow these steps:

• Executive Summary: This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers, and a summary of your financial growth plans. It is usually best to write this section last so that you can pull key information from other sections of the business plan.
• Company Description: Include your business's registered name, address, and key employees. Also, define your business structure (e.g. sole proprietorship, partnership, or corporation) and the percent ownership of each owner. Finally, outline the history of the company and how it has evolved.
• Business Goals: Outline what you aim to achieve in the short and long term. If you are seeking a loan, explain how the financing will help your business grow and how you plan to meet your growth targets.
• Products and Services: Describe your products or services in detail, including how they work, pricing models, typical customers, and your supply chain and order fulfillment strategy. You can also mention any current or pending trademarks and patents.
• Market Research: Explain what sets your product apart from the competition. Identify your competitors, what they do well, and how your business can do better. If you are serving an underserved market, explain this here.
• Sales and Marketing Plan: Outline your sales activities and the costs involved. Include your pricing strategy and how you arrived at those prices. Discuss your marketing strategy and how you plan to develop customer loyalty.
• Financial Analysis: Include income statements, profit-and-loss statements, a balance sheet, and a cash flow statement. You can use accounting software to generate these reports and calculate metrics such as net profit margin, current ratio, and accounts receivable turnover ratio.
• Financial Projections: Provide monthly or quarterly sales, expenses, and profit estimates over at least a three-year period, assuming you have obtained a new loan. Be accurate and realistic in your projections.
• Company Operations Summary: Summarize how your business is structured and outline each team's responsibilities. If any employees have exceptional skills, you may want to include their resumes.
• Appendix: Attach supporting information, such as licenses, permits, and credit history (if seeking financing). If the appendix is long, consider adding a table of contents.

Remember to tailor your business plan to your audience. For lenders, focus on how they will get repaid and provide conservative assumptions about sales forecasts and market scenarios. For investors, highlight ambitious business goals and the potential for exciting returns.

What to ask your lender

When applying for a small business loan in New Brunswick, there are several important questions you should ask your lender to ensure you get the loan that best meets your needs. Here are some detailed and direct instructions on what to ask your lender:

Loan Terms and Conditions:

• Ask about the interest rates, total cost, and any applicable fees associated with the loan. Inquire about the possibility of reducing the interest rate and any conditions attached to it.
• Understand the repayment process by clarifying the payment schedule, including the frequency (daily, weekly, or monthly) and the due date for the first payment.
• Inquire about the loan term and whether it aligns with your business needs. For example, determine if it is a short-term or long-term loan based on your purpose, such as purchasing inventory or investing in equipment.
• Find out if there are any annual or one-time fees associated with the loan, in addition to the interest rate.
• Ask about the loan amount you can be approved for, and how it is determined. Lenders may consider factors such as your credit health, income, employment history, current debts, assets, and the presence of a co-signer.

Lender Specialization and Reputation:

• Inquire about the industries they typically lend to. Some lenders specialize in specific sectors or have identified industries they avoid.
• Ask about their Better Business Bureau (BBB) rating and check review sites or testimonials to understand their reputation and how they resolve issues.
• Request to speak to current or past customers to gather insights and assess their satisfaction.

Application Process:

• Clarify the application process, including whether it can be done online or if a paper application is required.
• Understand the timeline by asking about the duration of the lending process, from application to funding. Find out if there are ways to expedite the process if timing is a priority for you.
• Compile the necessary documents in advance by asking the lender about the specific paperwork and statements they require.

Support and Flexibility:

• Inquire about ongoing relationship management and support. Ask if they can adapt to your changing business needs, such as substantial growth, ownership transition, or economic stress in your industry.
• Understand the loan modification or renewal process in case you need to make adjustments to your loan obligation in the future.

Remember to do your research, compare different lenders, and ask these questions to make an informed decision when applying for a small business loan in New Brunswick.

How to compare lenders

When comparing lenders, it is important to consider several factors to ensure you are getting the best deal for your business. Here are some key points to keep in mind:

• Interest rates and fees: Compare the interest rates and fees charged by different lenders. Look for lenders that offer competitive and transparent rates.
• Loan amounts: Different lenders will have varying maximum and minimum loan amounts. Choose a lender that can provide the amount of funding you need.
• Repayment terms: Consider the repayment schedule and whether it aligns with your business's cash flow. Look for lenders that offer flexible repayment options.
• Eligibility requirements: Review the lender's eligibility criteria, including credit score, time in business, annual revenue, and collateral requirements. Choose a lender that matches your business profile.
• Speed of funding: If you need quick access to capital, opt for lenders that offer faster funding times, such as online lenders.
• Customer service: Consider the level of customer support provided by the lender. Choose a lender that is responsive and accessible.
• Specialization: Some lenders may specialize in certain industries or have specific loan programs for certain sectors. If your business falls into a specific category, look for lenders with expertise in that area.
• Online reviews: Check independent reviews and testimonials from other borrowers to gauge their experience with the lender.
• Additional services: Some lenders may offer additional support, such as business training or mentorship. If these services are important to you, consider lenders that provide them.

Remember to compare multiple lenders and ask questions to ensure you fully understand the loan terms and conditions. This will help you make an informed decision and choose the best lender for your small business loan in New Brunswick.

What to do if your application is approved

If your small business loan application is approved, there are several steps you can take to ensure you receive the funds and manage the loan effectively. Here are some detailed instructions on what to do if your application is approved:

• Review the loan agreement: Once your loan application is approved, the lender will provide you with a loan agreement. Carefully review all the terms and conditions, including the loan amount, repayment terms, interest rates, fees, and any other relevant details. If there is anything unclear, don't hesitate to reach out to the lender for clarification. You may also consider having a business attorney review the agreement to ensure you fully understand your obligations.
• Sign the loan agreement: After thoroughly reviewing the loan agreement and addressing any concerns, sign the document to accept the loan offer. This indicates your agreement to the terms and conditions set forth by the lender.
• Receive the funds: After signing the loan agreement, the lender will disburse the funds, usually by transferring them directly into your business bank account. Ensure you have the necessary account information readily available to facilitate the transfer.
• Develop a repayment strategy: It is crucial to plan how you will repay the loan. Create a budget that allocates funds specifically for loan repayment. Ensure your monthly income exceeds your expenses, including the new repayment amount. Consider setting up automatic payments to avoid missing any due dates.
• Utilize the funds as planned: Use the loan funds according to your initial intentions. Whether it's for purchasing equipment, expanding your business, covering daily expenses, or marketing, stick to your business plan to ensure the loan serves its intended purpose.
• Maintain good financial standing: As you manage the loan, continue to build and maintain a strong financial position. This includes making timely payments, managing cash flow effectively, and maintaining a positive credit history. This will not only help with your current loan but also position you favourably for future financing opportunities.
• Explore support services: Many lenders offer support services to help small businesses succeed. These may include financial planning, business development resources, or mentorship programs. Take advantage of these services to enhance your business operations and maximize the impact of the loan.

Remember, it is essential to understand the terms and conditions of your loan agreement and to manage your finances effectively to ensure you can meet your repayment obligations.

Frequently asked questions