Frequently Asked Questions

This information is provided to loan clients to answer your most frequently asked questions:

Why should I apply for a loan with Community Futures?

What are the fees assiciated with the loan request process?

When will I know if my loan request has been approved?

How long does it take to receive my funds after my loan is approved?

What are the loan repayment terms and interest rate?

What are the criteria used to approve a loan request?

What are the most common reasons for a declined loan request?

 


Why should I apply for a loan with Community Futures?
Community Futures staff are committed to working with clients to ensure that their business plan and loan application are complete and ready for submission. When the loan application and business plan are submitted, the CF will review the material. Along with a recommendation from the CF, a summary of the business plan and financial projections are sent to the Loans Sub Committee for the final decision. (The LSC is comprised of local business people).

 

What are the fees assiciated with the loan request process?

  • Analysis Fee: A non-refundable application fee of ½%  is required with the loan application. This covers the cost of credit checks and other administration. There are no other ongoing administration fees.
  • Disbursement Fee: A fee is applied to all disbursements and will be incurred following application approval. It is calculated at ½% of the loan amount to a minimum of $50.
  • All solicitors’ fees are the responsibility of the borrower.

When will I know if my loan request has been approved?
Applicants will normally receive an answer on their loan request within (10 working days) of submitting their completed application. The process may be delayed due to the complexity of the loan and completeness of the business plan and loan application.

 

How long does it take to receive funds after my loan is approved?
Once a loan is approved, the CF drafts up a loan agreement (called a Business Loan Agreement) outlining the conditions of the loan. The loan will not be processed until a signed acceptance of this offer has been received by the CF.

Time required to disburse funds once the loan has been approved – depends on:

  • The borrower to return a signed Acceptance of the Business Loan Agreement.
  • The borrower to provide all the necessary information. (i.e. confirmation of insurance)
  • The registration of security documents, which is typically done by our solicitor. (i.e. registering a mortgage at land titles takes longer than registering a General Security Agreement)

 

What are the loan repayment terms and interest rate?
The normal term for loan repayment is 5 years with monthly installments. The loan amortization varies with the amount and nature of the borrowing.

Paying out Early: Generally CFs allow loans to be prepaid at anytime without penalty unless otherwise specified.

Interest Rates: Community Futures offices generally charge interest rates based upon the risk and collateral supplied by the applicant.  Currently CFNWA is charging 10%.

 

What are the criteria used to approve a loan request?
Loan approvals are based on the following criteria:
Character/Credit

  • Credit  history of the applicant
  • References - personal, business and credit.
  • Management Skill – the level of industry and/or business experience the applicant posseses

Capacity

  • Viability - the business’ ability to meet all financial commitments while still making money. This is demonstrated through the business plan and financial projections.

Capital

  • Equity - the amount of money the applicant has or is prepared to invest in the business.

Condition

  • Industry conditions
  • Local labour and sector conditions

Collateral

  • Land, buildings, equipment, vehicles, inventory, accounts receivable and other assets which can be used to secure the loan.
  • Quality of the collateral (depreciation rate, salability, market conditions)

Community Futures Operational Plan

  • Creates and/or maintains jobs in the CF region.
  • Diversifies the CF economy

 

What are the most common reasons for a declined loan request?

  • Poor credit history.
  • The applicant has not demonstrated that they possess the necessary management skills.
  • Inadequate cash flow available to service the debt and other business obligations.
  • The owner does not have enough equity in the business.
  • The business is too risky and/or the products and market are not proven.
  • Inadequate assets to secure the loan.

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