Financing Options and Licensing Requirements to Open a Small Shop
If you want to open a small shop such as a small convenience store, coffee shop, frozen yogurt shop, or flower shop in Canada, one option to finance your investment is to apply for a small business loan. You can use the money to rent property or finance equipment purchases. Business owners are offered private loans by financial institutions and government loans under the Canada Small Business Financing Program.
Under government sponsored programs, business owners are offered loans to finance up to 90 percent of the purchase to start a small business. There is also a limit on the annual gross revenues ($5 million). Applicants are asked to submit a business plan together with their application. If you plan to open a coffee shop, for example, outline your objectives and mission and include information such as company ownership, executive summary, and total assets and start-up expenses. List required equipment and start-up inventory such as coffee grinders and coffee makers, counter area equipment, and service equipment, including blenders, dishwashers, toasters, microwaves, and so on. It is a good idea to list start-up equipment such as office and retail supplies, for example, coffee bags, napkins, filters, coffee beans, and so on. Detail your store and serving area equipment such as ventilation, security, cash register, flatware, glasses, and plates. Finally, list start-up requirements and expenses, including rent, insurance, consultants, brochures, stationary, and legal fees. The next step is to apply for a small business loan. The terms vary from 7 to 10 years based on the types of assets to be financed. You can choose between fixed and variable rates. Borrowers are asked to provide collateral up to 25 percent of the loan amount. They also pay a registration fee up front (2 percent of the amount requested). There is also an annual administration fee. Business loan insurance options are available.
Again, it is a good idea to develop a business plan and include details such as estimated profit and costs, business structure, management details, etc. The next step is to visit your local bank, especially if you are an existing customer, and ask about different financing options. If you have personal or business assets such as business equipment, buildings, or vehicles, you can use these assets to guarantee loan repayment. Banks are willing to offer lower interest rates when you pledge a valuable asset as collateral. You can tap on your home equity as well but this is a last resort because you risk losing the asset used as collateral.
The licensing requirements vary depending on the type of establishment, i.e. whether it is a cafeteria, coffee shop, brasserie, bistro, pub, or specialty food restaurant. Other options are food tracks and fast-food restaurants and casual dining and gourmet restaurants. To begin with, inquire about the regulations and licenses that apply to your coffee shop or flower shop in your province or territory of residence. The next step is to choose a business structure for your company and type of business. Incorporate or register your business and ask if you are required to remit and collect harmonized sales tax. Note that you may also need permits and licenses from the municipal, provincial, and federal authorities.