5 misconceptions about Community Futures business loans

Community Futures Howe Sound business loans work a little differently to your standard traditional loans, which is why we often hear misconceptions about how it all works.

Here are five common misconceptions about Community Futures business loans – and how we actually operate.

1. You need perfect credit to qualify

A less-than-perfect credit history doesn't automatically mean you can't qualify for a Community Futures loan.

It’s not uncommon for our applicants to have made a mistake in their earlier years, but to have sorted out their finances and become more adept with their cash over time. However, that can mean an automatic rejection from a bank anyway.

Our loans are character-based, which means that while we will look at your credit history, we will also hear you out about your journey since then. We look at the overall picture, including your business, your experience, your plans, and your ability to repay a business loan.

Credit history is one of the factors we consider when assessing an application, but it isn't necessarily the deciding factor on its own.

2. The interest rate will be much higher than a bank loan

You might assume that borrowing from an alternative lender means paying a significantly higher interest rate.

That's not the case with Community Futures Howe Sound. Our business loan interest rates are generally on par with bank rates, at a little above the prime rate.

Our ultimate goal as a character-based business loan provider is not to turn a profit. It is to support loan businesses and Sea to Sky employment. When we do generate income with our interest rates, it is used to pour into the next business loan. This way, we aim to continue growing the pool of funds available for Sea to Sky entrepreneurs, and therefore continue to grow the local economy.

3. You need an existing business to apply

Existing businesses typically have business plans, established products and services, and clear goals and strategies in place. But you don’t necessarily need all of those things in order to apply for a business loan with us. 

In fact, many of our business loans are for entrepreneurs who are just getting started.

We will of course need to see a clear business plan, and we will meet with you (often multiple times) to talk through your goals and strategies. This is all to ensure that you have the best chance of success with your business.

4. If a bank turns you down, you won't qualify for a Community Futures loan either

A bank declining your application doesn't necessarily mean that you won't qualify for financing elsewhere.

Different lenders use different criteria when assessing loan applications. Traditional banks may place a strong emphasis on factors such as credit history, collateral and established financial records. Character-based lending takes a broader approach.

That's one of the reasons Community Futures exists. If you've been turned down by a bank, it may still be worth having a conversation with us about your financing needs.

A bank's decision doesn't automatically determine ours.

5. There's no help available to prepare for a Community Futures loan application

Applying for business financing can feel overwhelming, particularly if you're not sure what information you'll need or how to best present your business and financial plans.

But business loans are only part of what we offer local businesses at Community Futures Howe Sound.

We also provide free support to local entrepreneurs and business owners, including help with preparing for the lending process. We don’t just encourage entrepreneurs to meet with us before applying for a business loan – it's part of the process. This way, we can coach you through the application before you even apply, giving all parties more confidence in your success.  

Applying for a small business loan in the Sea to Sky

If you're a business owner or entrepreneur in Squamish, Whistler or Pemberton and you're considering financing, don't let assumptions about our business loans stop you from exploring your options.

Book a free, no-strings-attached business advice session with Community Futures Howe Sound to learn more about our character-based business loans and whether they could be a fit for your business.