I guess now it’s time to get closer to the Government loans as this type of funding is neglected unfairly very often.
Usually, when looking for financing, business owners first of all visit traditional financial institutions. But are the right places to start shopping around for a loan? Let’s compare the terms that financial institutions offer vs. the government’s ones with their interest-free loans.
|Traditional Loan||Government Loan|
|Interest rate applies. Rate may be variable||No Interest rate|
|Repayment usually starts 1 month after advancing the loan||The repayment period is delayed for up to 12 months after the end of the project the loan has been obtained for|
|Hidden fees apply (processing, registration, application, early settlement, etc)||In rare cases, registration fee applies|
|Late or missing payment fee are set as high as banks are allowed to||Late or missing payment fee are set to industry minimum|
|Repayment period is fixed||Repayment period may be extended in certain cases|
|Loan guarantee or security may be required (cash, collateral, asset)||Loan security is not required|
|Credit rating and history are used to set interest rate and loan terms||Credit rating and history are not part of a due diligence|
|Loan may be borrowed in foreign currency and is subject to currency risk and exchange rate fluctuations||Loans are borrowed in national currency|
|Insurance may be required||Insurance is not required|
|Any document or proof may be requested to support the application||Specific list of documents required for the application|
|Unavailable or unfavourable for start-ups||Some government loans are specifically designed and available for start-ups|
|No reporting is required as long as loan is paid||Regular reporting is required|
As you can see, there are way more advantages of government interest-free loans though they are not always known. Government loans are good to finance purchase or upgrade of equipment, business expansion, research and development, land purchase, etc. Don’t miss government loans!
P.S. Just few numbers for warming up: Investing in Business Innovation offers you up to $1,000,000; Advanced Manufacturing Fund – $10,000,000 – $20,000,000; Investing in Business Growth and Productivity – up to $20,000,000. That’s not bad at all! What do you think?