A few years ago not many Canadian small business owners had heard of a merchant cash advance as a source of working capital financing. In 2010 there was only a handful of companies providing the service in Canada so most small businesses would automatically think “bank” or “credit union” if asked where to get a loan for their business.
Today, small business loans in Canada are no longer “ruled” by the banks. On the positive side, there are hundreds of options from small private companies, large public companies, and individual brokers or re-sellers. On the negative side, most of them are doing business on line so you never actually meet the people behind the business. This means you need to do a little more homework.
Many of the large companies offering small business loans in Canada are really just branch offices of big American Corporations. Although we love our neighbours to the south, we all know the reputation of Wall Street. On the other hand, many of the other companies are actually individual brokers or re-sellers that earn commissions to refer your business somewhere else. They don’t care about you or your business – they just want their commissions and move on to the next guy. You need to find a company somewhere between the Wall Street sharks and the guy working out of his car.
In order to choose the best company you need to do a little research. Here’s some questions you should ask:
Who owns the company?
What’s their background?
Are you dealing directly with the source of funds or are they a broker?
Are there Management profiles available on the website or a link to LinkedIn?
Are they easy to contact? (do they answer the phone?)
Ask to see a contract first – look for hidden fees
Ask how repayments work – do you need to switch processor? (if yes hang up)
Once you’ve decided on a particular company, ask for specific details in the offer. Call your top three choices and ask them “why are you better than the other guys?” And last but not least always ask for contact info for a few of their clients for a reference check.