Business Acquisition Loan

By mmuise
Description:

This loan supports entrepreneurs who intend to acquire a significant stake of at least 25% of the value of an existing business with the aim of executing a takeover in a maximum of 5 years. The applicant must work be involved full-time in the business and the project must be part of a strategy aimed at transferring the management and ownership of the business from the current owner to the entrepreneur.


Comments on Funding:

1. Funding is up to $250,000 and there are 3 types of financing available:
a) Term or equity loan, repayable over 5 years, or under certain conditions, up to 7 years, with the possibility of postponing principal payments for up to 12 months.
b) “Excess Cash Flow” loan, where the principal is repayable annually according to a stipulated percentage of excess cash flow, over a 10-year period.
c) Debenture maturing at between 3 to 5 years, or under certain conditions, up to 7 years, and which may be convertible and backed by share options.
2. This loan can be combined with conditionally non-repayable financing that may cover 50% of external professional fees related to the applicant's project.

Loan terms and conditions:
1. Repayable at any time without penalty.
2. Collateral may be required for this type of financing.
3. Interest rate: Competitive and risk-based.

Deadline: Continuous Intake
Eligibility:

Applicants must be seeking financing for the acquisition of a business with the intention of taking over that meet these eligibility criteria:

  • Be legally constituted;
  • Be located in the DEL region or plan to be;
  • Operate in an eligible industry: Aerospace, Agri-Food, Transport and Logistics, Information Technology, and Life Sciences, and offer value-added services or products generally intended for businesses (B2B);
  • Submit a project that involves acquiring a business with the intention of taking it over and that will help create and/or maintain jobs;
  • Own at least 25% of the business and work there full-time;
  • Have experience and training that is relevant to the project;
  • Submit a project for which government financing and DEL financing combined cover a maximum of 50% of the project expenses;
  • Demonstrate that the project is based on realistic financial forecasts demonstrating profitability and growth potential;
  • Provide current financial statements showing 20% equity after the project and ability to repay;
  • Demonstrate that the business and entrepreneur are not in default to the government or its creditors, nor are they the subject of any litigation.
Application Steps:

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Documentation Needed:

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Other Things to Note:

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About the author
mmuise