How Your Bank Can Get You Financially Fit

How Your Bank Can Get You Financially Fit

Lifestyle | Posted by YouInc.com - November 10, 2014 at 1:00 am
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By switching banks during his loan application process, fitness expert Julian Scott found the right partner to finance his start-up.

For many entrepreneurs, the journey to start a business begins with a search for financing. “I went into this thinking all of the big banks are the same,” recalls business owner Julian Scott.

Scott is the co-owner of a new fitness facility called CrossFit Metric. Unlike conventional gyms, CrossFit Metric focuses on group training and sells exclusive memberships in small numbers. The business opened on October 1, 2013.

CrossFit is a strength and conditioning program that promises to improve, among other things, muscular strength, cardio-respiratory endurance and flexibility. The internationally recognized program features a constantly changing mix of aerobic exercise, gymnastics, body weight exercises, and Olympic weight lifting. Participants work out in groups, providing all-important community support so people of any age or physical ability can benefit.

Located at 756 Mt. Pleasant Road in Toronto, CrossFit Metric pays an annual fee to be one of over 7,000 CrossFit affiliated gyms. At 4,000 sq. ft., the fitness facility is large enough to handle its 2014 goal to sign up 300 members. Scott claims he’s on track to achieving that goal.

Unlike many start-up entrepreneurs, Scott and his partner were able to save some money to invest in the business. “We had saved a significant amount of cash ourselves,” he recalls. However, Scott calculated his business would need to secure additional capital of $100,000.

Scott believes that people are more likely to achieve their workout goals if they find the right trainer and program for them. The same is true in business.

Because the entrepreneurs had such a large pool of cash, they figured it would be easy to apply for financing under the Canada Small Business Financing Program. Under the program, the Government of Canada supports small businesses seeking loans from financial institutions by sharing the risk with lenders. “We weren’t asking for a one-to-one loan ratio, just $100,000 for cash flow purposes,” explains Scott.

“We went through the application process and had some accountants help to put our business plan together,” he recalls. “We approached another major bank, jumped through their hoops, and it seemed like the loan was imminent.” That’s when Scott experienced an unexpected disappointment.

“They wanted full security for the $100,000,” he says. “The amount of security was so high, that it was almost as much as the loan amount we were requesting.” Scott couldn’t see the logic in offering up nearly $100,000 of his own cash to secure the $100,000 loan because it would restrict his access to working capital.

“The first bank also wanted a personal guarantor, someone with high net worth to back it all up,” says Scott. And that was a deal breaker for him.

The entrepreneurs went to see Mario Simoes, a Scotiabank Small Business Advisor at 110 Spadina Avenue in downtown Toronto. Scott had enjoyed previous business dealings with Simoes and asked him to start the loan process over again – but this time with Scotiabank.

“Mario was able to move faster compared to the other bank we were dealing with,” claims Scott. Simoes moved quickly to process the paperwork and returned with a happy result: under the Canada Small Business Financing Program, Scotiabank could lend the business more than they were asking for without a personal guarantor.

Scott was thrilled. When asked about the difference in experiences between the two banks, he said his dealings with Scotiabank “seemed like a more personal touch. The banker really analyzed us and our business instead of checking off boxes for credit requirements and security.”

He also observed that Scotiabank seemed to trust its small business banking manager more than the other bank. “Mario was doing his best to work with his internal people to make the deal work for us, and I really appreciated that,” explains Scott. “The bank seemed to trust Mario to make the right decision” regarding the loan application.

In addition to the financing, Scott set up a business line of credit  to help manage cash flow. He also signed up for a Scotia Momentum for business VISA card to take advantage of the generous 25-day interest-free payment grace period.

Scott believes that people are more likely to achieve their workout goals if they find the right trainer and program for them. The same is true in business: “the right small business banker made a difference here,” he says.

How did you secure the funds to start your business? Please share your experience in Scotiabank’s Get Growing For Business Discussion Group on LinkedIn.          

[DISCLAIMER: The experiences of this customer and the customer’s relationship to Scotiabank are unique to that customer and may not necessarily apply to any other individual business. The combination of Scotiabank advice, information and resources presented to this customer constitute a customized solution for that particular customer and therefore should not be expected in a different business situation.]

Tags: small business, scotiabank, loans, finances, banking, profiles

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