Frequently Asked Questions
How do I apply for a loan from SMEDCO?
How much equity (down payment) do I need to qualify for a loan?
SMEDCO’s minimum requirement is 10% of the project costs; however, a greater downpayment may be required for some projects. Clients are expected to contribute all that they can to the business. Equity In lieu of Cash will be discussed on a project by project basis based on program guidelines.
What has SMEDCO found to be common mistakes for new businesses?
One of the most common mistakes is not keeping proper bookkeeping records and financial statements – many Métis businesses fail for this reason. If a business owner does not have the skills to keep proper financial records, they should hire the services of a qualified bookkeeper or accountant – this is money well spent. Other mistakes include excessive owner withdrawals from a business, not planning for seasonal changes in business, and not setting aside a cash reserve for income tax and major equipment repairs.
Is an Application Fee charged when I submit my loan application?
No.
What are the more common reasons why some loan applications are declined?
- Not enough owner equity in the business
- The business appears too risky
- The prospects of repayment are poor
- There is not enough security
- The applicants have inadequate management skills
- The product or market is unproven
- The applicant has a poor credit history
- Doesn’t provide a reasonable income to cover personal debt
What industries/sectors does the fund support?
We support all sectors.
How many times, and when, can we go back to SMEDCO?
You can reapply to SMEDCO as many times as you want, however, we cannot provide more than $500,000 in outstanding financing at any one time.
Does the percentage of Métis ownership determine the amount you can obtain from SMEDCO?
SMEDCO only supports Métis owned and controlled businesses, those where 51% of the beneficial ownership of an enterprise is held by Métis entrepreneurs. Where ownership and or control of a business is not solely held by Métis entrepreneurs each project will be considered on a case by case basis to ensure that the Métis owner will stand to gain from the funding provided by SMEDCO.
Are personal guarantees taken by SMEDCO?
Yes, SMEDCO does require personal guarantees. Funding to partnerships and proprietorships are supported by an accepted letter of offer signed by owners of the business so they are personally obligated.
In the case of a limited company, SMEDCO makes the contribution to the shareholders and the company jointly so the owners are personally obligated.