Frequently Asked Questions

 

A.  Our minimum cash equity requirment is 10%.  Sound lending practice dictates that the borrower should share in the risk by investing their own capital into the business venture as well.  For all those loan applicants that are applying for a contribution through Aboriginal Business Canada, the 10% cash requirement for the youth program and 15% for other funding programs is a prerequisite. If the applicant is lacking cash equity, we will consider alternative security only in instances where Aboriginal Business Canada is not involved and the secondary source of security has proven value.

 

 

A.  Our interest rates on start-up businesses are comparable to those rates charged by most banks and credit unions.  We evaluate the risk on each loan based on the Five C’s of credit;

 

CHARACTER - What skills, training & education does the applicant have.

CREDIT - We examine the applicant’s credit worthiness by reviewing their prior credit history.  If the applicant’s credit history indicates an unwillingness to be responsible for their own credit, their is a good chance they will not repay any loans to Apeetogosan.

COLLATERAL - What assets are available to secure the loan?  Solid security provides a reasonable assurance of the borrower’s commitment to making the business venture succeed.

CAPITAL - This refers to the cash equity committment by the borrower that they are investing into the project. 

CAPACITY - Does the business plan demonstrate the ablility of the business to meet its operating costs and ability to repay the loan?

 

Our benchmark rate is based on current bank prime and adjusted according to the degree of risk. 

 

 

A.  Yes.  The loan fee is charged to cover the costs of conducting the loan process such as the loan application review, preparation of the authorized credit, preparing and registration of security documents and other "out of pocket" costs incurred by Apeetogosan.  The loan fee does not cover any legal costs that may arise.  The loan fee is based on the size of the loan, level of risk and administration costs.

 

 

A.  The credit history of the applicant.

 

     The viability of the business proposal.  Does it make sense?  Is there a solid, verifiable market for the product or service?

 

     Management capacity, experience, and the general background of the applicant.

 

     Cash flow projections for the business proposal demonstrating capacity to repay the loan request.

 

     Competition of the business proposal and the applicants ability to mitigate or control competitive pressures.

 

     The quality of collateral security being pledged in support of the loan.

 

     How sensitive is the business to external factors such as economic conditions, dependence on certain industries, etc. 

 

     Does the applicant have a contingency plan or alternate sources for repayment of the loan?

 

 Q.  What are some the the more common reasons a loan application is declined?

 

A.  Not enough equity or risk capital in the business by the applicant.

 

     The business is not proven viable or has a high risk of failure.

 

     The projections do not indicate that the business can support the loan repayment.

 

     The applicant does not have adequate management skills.

 

     The applicant has no respect for credit and has a lengthy history of avoiding repayment of credit.

 

 

A.  Personal loans and residential mortgages.

 

     Working capital loans secured by inventory.

 

     Any loans that would be considered investment loans.