FREQUENTLY ASKED QUESTIONS

Small Business ELV - Frequently Asked Questions

How It Works

CAN I USE THE BUSINESS 500 ELV TO PAYOFF MY CREDIT CARDS AND OTHER DEBT


Yes. And it’s probably a good idea. Because the Interest Rates for the Business 500 ELV are so low compared to other credit facilities, Business Owners often use it to consolidate all their debt.

By doing so, it saves you thousands of dollars in interest, simplifies your Business Transactions and allows you to only have to make one payment a month.




Can I register Business 500 Credit Line against my Rental Property?


Absolutely. Not only can you use your Rental Property to qualify for the ELV, but unlike the Banks, we can use 100% of your Rental Revenue as income. Which means you could be approved for a much higher limit.




The bank told me that if consolidate all my Credit Card debt into my HELOC that I will have to cancel my credit cards once they are paid off. Does it work the same way with the Business 500 Credit Line?


NO. Unlike the Bank, you will not be required to close any Credit Cards or Lines of Credit once it has been paid off using using the B500.




WHAT IS THE DIFFERENCE BETWEEN THE BUSINESS 500 VERSUS A REGULAR HOME EQUITY LINE OF CREDIT (HELOC)?


There are quite a few differences that makes the BUSINESS 500 Credit Line more attractive to Self-Employed Business Owners than a regular HELOC. The two major differences are:

  1. The Home Equity Line is attached to a VISA Card;

  2. Applicants are Approved using the income reported on their Business Bank Statements rather than their Personal Income or Business Financial Statements reported to the Canadian Revenue Agency.

Business Owners can take advantage of all the perks that come with a Visa Card including a 21-Day Interest Free Period and 1% Cashback on all Purchases. If you pay the balance back within the 21 Day Interest Free period ---you won’t pay any interest and VISA will pay YOU 1% for the purchase.

You don’t get those Perks with a HELOC!




How long does it take to get approved and get the Business 500 Credit Line activated?


It takes about 10 business days from the time we receive your application to the day your B500 Card is issued. However, that may change slightly based on appraiser availability.




“BEFORE I SEND YOU MY APPLICATION AND PERSONAL DOCUMENTS, HOW DO I KNOW THAT YOUR COMPANY IS REAL AND THAT MY INFORMATION IS PROTECTED?”


The Business 500 Home Equityline Visa is an Exclusive Lending Product issued from our Brokerage. We are registered Mortgage Brokers and are Licenced under the FSCO (FINANCIAL SERVICE COMMISION OF ONTARIO).

We are required to provide our Mortgage Broker and Brokerage Licence Number on our Website, Marketing, and email communication. You can verify our Licence number by going to the FSCO website: www.fsco.gov.on.ca/en/

The Business 500 Equityline Visa is a product issued and managed by Home Trust Canada. Their Website is www.Hometrust.ca




“I SAW THE 4 -STEP PROCESS FOR GETTING THE BUSINESS 500 ELV ON YOUR WEBSITE. CAN YOU EXPLAIN THE STEPS IN DETAIL?”


We understand that Business Owners are very busy and their time is limited, so we have tried to simplify and streamline the process as much as possible to provide an Approval within 3 to 5 Business Days of submitting all the requested documents.

STEP 1:

First, we'll start with a brief 5-minute phone call before you send us any paperwork. It's important that you understand the process and the B500 in detail before we start your Application.

We also let you know what documentation we need to process your Application. Business Owners do not have to physically drop off their documents to our office; they can be sent via email or fax.

STEP 2:

Typically, we will have an Approval for you within 3 to 5 Business days. Within those 5 days we might have a few additional discussions as questions arise while we prepare your application for submission.

Your Approval will include a Credit Limit amount and an interest rate range. If you are satisfied with those terms, we move forward by ordering the Appraisal which generally takes 3 days to be completed after the inspection date. When the Appraisal is complete, we issue you a Formal B500 Credit Line Commitment to review and sign. If you don’t like the terms, you can cancel the application without paying a Cancellation Fee.

STEP 3:

One of our Mortgage Agents will review the B500 Credit Line Commitment page by page with you over the phone or in person.

It is important to note that we do not work for the Lender, and that as Mortgage Agents we represent you in this transaction and have a fiduciary responsibility to work in your best interest and to disclose all material items mentioned in the commitment.

After you sign the Commitment, we submit it to the Lender with any additional documents needed to activate the Credit Line. Once the Commitment and Loan conditions have been validated, the Lender instructs the Lawyer representing you, along with the Final Mortgage Documents to be signed.

STEP 4:

When you meet with your Lawyer and the Business 500 Credit Line is Registered, you will receive Cheques as well as the VISA Card within 10 Business Days.




“DO YOU WORK FOR THE CREDIT CARD COMPANY OR THE BANK?”


We do not work for either.

WE WORK FOR YOU - THE CLIENT and have a fiduciary responsibility to work in your best interests. We are Licenced Mortgage Brokers in Canada and are licenced under the FSCO.

The Business 500 ELV is an exclusive product that our brokerage is offering, but make no mistake, we represent you when we submit your application to the Lender for the Business 500 ELV.




WHAT IS THE BUSINESS 500 HOME CREDIT LINE VISA?


The Business 500 ELV is a combination of a Home Equity Line of Credit with the added convenience and perks of a Platinum Visa Card.

Applicants can secure up to $500,000 by registering the B500 ELV against the equity in your home just like a Home Equity Line; and access the funds using a convenient VISA card.




WHAT CAN I USE THE BUSINESS 500 CREDIT LINE FOR?


The majority of our clients use the B500 Credit Line to better their Financial position, to manage their expenses, as well as investing into their Business. Some examples of this are:

  • Renovated their Restaurants
  • Consolidated their Credit Card debt.
  • Open another Business Location
  • Paid off a Business Loan which then increased their Cash Flow
  • Purchase more Inventory
  • Pay off a 2nd Private Mortgage
  • Buy a Commercial Property




WHO CAN APPLY FOR THE BUSINESS 500 CREDIT LINE?


Business Owners or Self Employed applicants that have been operating for ideally over 1 year. However, we have approved clients who have been in business for as little as 6 months on a case to case basis.

The Business 500 Credit Line is designed for all types of Business and Self- Employed Clients. Including:

  • Sole Proprietorships under Business Names

  • Sole Proprietorships under Personal Names

  • Partnerships

  • Corporations

  • Independent Contractors – such as Tradesmen, IT Specialists, Consultants




“I DON’T NEED THE VISA CREDIT CARD - I JUST NEED A LINE OF CREDIT FOR MY BUSINESS. CAN I APPLY FOR ONLY ONE PRODUCT?”


The Business 500 Credit Line is a Home Equity Line of Credit AND a Visa Credit Card so you get access to BOTH products. This merging of This means that you can access the funds in in the following ways:

  1. Use the VISA Credit Card to make all of your Purchases & access cash at any ATM or Retail store displaying the Visa or Plus logos
  2. Transfer the funds from the B500 ELV into your Bank Account
  3. Write Cheques from your ELV account for any amount.




HOW MANY YEARS DOES MY BUSINESS HAVE BE OPERATING TO QUALIFY FOR THE BUSINESS 500?


We prefer that the applicant be operating their Business through a Bank Account for at least 1-year, but we have approved clients who have been in business for as little as 6 months on a case to case basis. If the applicant’s new business is in the same industry as their Previous Employment, then exceptions are made.




I NEED FINANCING FOR A NEW BUSINESS I AM LAUNCHING, CAN I APPLY FOR THE BUSINESS 500 CREDIT LINE?


Absolutely. As long as you own a Home or Rental Property that has Equity available, we can approve you for upto a $500,000 CREDIT LINE. However, because the Business is not operating yet, we can qualify you through our START-UP BUSINESS PROGRAM.




DO I NEED TO OWN A HOME TO APPLY?


Yes. The Business 500 Home Credit Line is secured against the equity of a home, just like a HELOC. However, the Business 500 Credit Line is the only Business Credit Line that can be registered against the Equity of a Residential Rental Property that has 1 to 4 units.




CAN I USE THE EQUITY IN A COMMERCIAL PROPERTY THAT I OWN TO REGISTER THE BUSINESS CREDIT LINE?


We can approve you based on the Business Bank Statements of the Corporation that owns that Commercial Property. However, we can only register the Credit Line against a Residential Property.




WHAT PROPERTY TYPES ARE ELIGIBLE TO QUALIFY FOR A BUSINESS 500 CREDIT LINE?


Essentially, all properties that are Registered with the Municipality as RESIDENTIAL are eligible for the B500 Credit Line as well as some properties that are considered AGRICULTURE.

However, homes that are outside a major urban city centre in a rural area will be reviewed on a case-by-case basis. We will advise the applicant before they order an Appraisal if the property is in the Lending Area.

The following property types DO NOT qualify for the B500 Credit Line:

  • Rental Properties that exceed 5 units

  • Boarding Homes

  • Commercial Properties

  • Storefront Apartments

  • Condo Hotels




“I DON’T WANT TO GET A MORTGAGE ON MY HOME, CAN I GET THE B500 CREDTI LINE ON MY RESIDENTIAL RENTAL PROPERTY?”


Yes. Not only can you use your Rental Property to qualify for the ELV, but unlike the Banks, we can use 100% of your Rental Revenue as income. Which means you could be approved for a much higher limit.

As for documents, we would need the same paperwork: Mortgage Statement, Property Tax Bill, and Lease Agreements.




Is there anything else I should know about this Credit Line VISA?


Registered trademark of Home Trust Company. *Visa Int./Home Trust Company, Licensed user of mark. Each mortgage application is subject to approval based on its own merits in accordance with Home Trust’s policies and guidelines. The rate used to calculate the GDS and TDS ratios for all mortgages will be the greater of the contractual mortgage rate or ELV rate (offer rate) plus 2% or the five year benchmark rate published weekly by the Bank of Canada. Product may differ or may not be available in Quebec. You can qualify for up to 80%1 of the value of the property, minus the balance registered mortgages. Total Home Equity Line of Credit on Residential Real Estate cannot exceed 65% of the value of the property.

Visa Auto Rental Collision/Loss Damage Insurance: The Visa Collision/Loss Damage Insurance program is underwritten by Royal and Sun Alliance Insurance Company of Canada and is provided by a group policy issued to Visa Canada Association. Complete terms and conditions, including exclusions and limitations, are outlined in the Certificate of Insurance provided with your card.
2 The Visa Zero Liability Policy for protection against fraud: Certain restrictions, limitations and exclusions apply. The Visa Zero Liability policy protects Visa cardholders who have a Canadian issued Visa card and experience fraud through unauthorized use of their card. Visit www.visa.ca for more information.
3 Purchase Security Insurance, so you can shop at ease: Purchase Security insurance is underwritten by Royal Sun & Alliance Company of Canada. Complete terms and conditions, are outlined in the Certificate of Insurance provided with your card.





Approval Process

Do you need to request a copy of my Credit Bureau?


Yes. Pulling a Credit Bureau on every applicant is part of the approval process.




“I HAVE A CREDIT SCORE UNDER 650 AND HAD SOME LATE PAYMENTS LAST YEAR. DO I STILL QUALIFY?”


Yes! Your Credit Score is just one of the components that are used to qualify you for the Business 500 ELV. We do not turn down applications based on a weak score alone. We encourage you to apply!




My husband/wife is also on title for our home, If I want to apply for the Realtor® ELV do you need my spouse's information too?


Yes. We need an application and information for anyone who is on title on your home or rental property.

However, if the Income reported on your T4As is strong enough, we may not need the employment documents from your spouse to qualify you for the Credit Line.




I don’t own a home, can I apply for the Business 500?


No. The Business 500 Credit Line must be secured against a residential property.




I am behind in paying my Property Taxes. Do I have to pay my outstanding Property Taxes before I apply for the Business 500?


No. You can apply and be approved for the Business 500 if you have not paid your Property Taxes.

However, before the ELV can be issued, all Property Taxes must be paid and be up to date. You can use the ELV to pay the taxes.




HOW IS QUALIFYING FOR THE B500 DIFFERENT THAN APPLYING FOR A HELOC AT THE BANK?


The Business 500 ELV is the only Credit Line that accepts 100% of Business Activity as Income. This is good news for Business Owners because that means your Approval is based on the Deposits made in your Business Bank Statements over that past year - and those statements we determine how much you qualify for.

Other Banks and Lenders request Financial Statements or Personal Income Tax Documents like your Notice of Assessment and T1 Generals to qualify Business Owners for a Loan or a Credit Line.

The problems with this is that these documents are prepared to minimize taxes and don’t actually reflect the real financial status of the business.




WHAT DOCUMENTS DO I NEED APPLY FOR THE BUSINESS 500 CREDIT LINE?


To apply and be approved for Business 500 Credit Line we will need the following documents:

  • BUSINESS 500 APPLICATION

  • BUSINESS REGISTRATION:

    • ARTICLES OF INCORPORATION

    • SOLE PROPRITORSHIP BUSINESS LICENCE

  • 1- YEAR BUSINESS BANK STATEMENTS

  • HOME OR RENTAL PROPERTY: MORTGAGE STATEMENT/PROPERTY TAX BILL

  • RENTAL PROPERTY: MONTHLY LEASE AMOUNT

Once you are Approved, we need to order an Appraisal on your home to verify its value.

After the property is appraised, we need a few Business Invoices that match the deposits from your Bank Statements, as well as a VOID CHEQUE to arrange automatic minimum payments.

Note: if you applied for a Business Line of Credit at a Bank, they would a require a substantial number of additional documents to qualify you AND you would have to be in operation for a minimum of 2 years. The Bank would request the following additional documents for every Director or Partner registered on a Business:

  • 2-YEARS OF FINANCIAL STATEMENTS (PREPARED BY AN ACCOUNTANT)

  • 2-YEARS OF YOUR PERSONAL NOTICE OF ASSESSMENT

  • 2-YEARS OF YOU PERSONAL T1-GENERALS




WHAT FACTORS DETERMINE IF I AM APPROVED FOR A B500 CREDIT LINE, FOR HOW MUCH, AND AT WHAT INTEREST RATE?


The major factors that determine your Limit Amount and Interest Rate are:

  • The strength of your Business Bank Statements

  • Your Personal Credit Score

  • The Equity Available on your Home

  • Property location & condition

The Interest Rate is mainly determined by your Credit Score and the Loan to Value of the total mortgages registered against you’re the Appraised Value of your Home.

Simply put, a Client with a Credit Score over 700 with a low LTV of 50% and home in a major City, would qualify for a better Interest rate than a client with a Credit Score under 700 and higher LTV of 80% and home in a rural area.




WHAT DOES LOAN-TO-VALUE RATIO (LTV) MEAN?


The Term Loan-To-Value Ratio is simply the total value of Mortgages against the Appraised Value of your home stated in a percentage. For example, if your property was Appraised at $100,000 and your 1st Mortgage amount was $60,000, your Loan-To-Value would be 60%.

To calculate the LTV you would do the following:

  1. Divide 60,000 into 100,000, which would equal: 0.60
  2. Multiple 0.60 by 100 which would be 60.00 or 60%




WHAT IS THE MAXIMUM LOAN TO VALUE (LTV) ON MY HOME THAT I CAN BE APPROVED FOR WITH THE BUSINESS 500 CREDIT LINE?


Canadian Mortgage Law states that all Credit Lines or HELOCS cannot exceed 65% Loan-To-Value of the Appraised Value of your Home.

For example, if your home was worth $100,000 and was Mortgage Free, then you could be Approved for upto $65,000 or 65% LTV.

If you have a 1st Mortgage already registered against your home, then the total of the 1st Mortgage Balance and Business 500 Credit Line cannot exceed 80% Loan-to-Value of the Appraised Value of your home.

For example, if your home was worth $100,000 and there was a 1st Mortgage Balance of $65,000 (65% LTV), then you could be Approved for a Credit Limit upto $15,000 (15% LTV).

If you add the 1st Mortgage Balance and the Credit Limit the total LTV would be $80,000 or 80% LTV




MY WIFE IS ON TITLE FOR OUR HOME BUT IS NOT A REGISTERED ON MY BUSINESS. DOES SHE HAVE TO BE A CO-BORROW ON THE CREDIT LINE?


Since the Business Line is secured against the Equity of your home like a HELOC, any person who is on Title on the Home must be registered as a CO-BORROWER on the CREDIT LINE.




I WANT TO QUALIFY FOR THE FULL $500,000 CREDIT LINE LIMIT, BUT I DON’T THINK I SHOW ENOUGH BUSINESS INCOME TO QUALIFY? MY WIFE WORKS FULL-TIME, CAN I USE HER INCOME TO QUALIFY FOR A HIGHER CREDIT LIMIT?


Yes! We can use the Income of any Spouse or Person who is on TITLE of the Home as a CO-BORROWER or GUARANTOR to maximize the Credit Limit you are Approved for.

We would not require her Personal Tax Information. We would only require the following income documents from the list below to apply for a Higher Credit Limit:

  • SALARIED EMPLOYEE: JOB LETTER / PAYSTUB
  • HOURLY EMPLOYEE: JOB LETTER / PAYSTUB / T4: 2-YEARS
  • SALARY & COMMISION: JOB LETTER / PAYSTUB / T4: 2-YEARS




MY WIFE IS ON TITLE OF OUR HOME AND MY BUSINESS DOES VERY WELL. DO I NEED STILL NEED TO PROVIDE MY WIFE’S INCOME DOCUMENTS?


If we can Approve you for the B500 Credit Line amount you require by only using your Business Income, then we will not request any Income documents from your Spouse.




DOES THE INTEREST RATE INCREASE IF THE BUSINESS 500 CREDIT LIMIT IS REGISTERED IN THE 2nd MORTGAGE POSITION BEHIND MY 1ST MORTGAGE?


Unlike Private and Bank Mortgages whose Interest Rates significantly increase between 8% to 20% if they are in 2nd Mortgage Position. We are proud to say that the Mortgage position of the B500 Credit Line does not affect the Interest Rate.




DOES THE B500 CREDIT LINE INTEREST RATE FLUCTUATE WITH THE VARIABLE BANK PRIME RATE LIKE THEY DO FOR REGULAR HELOCS?


NO! This is another attractive feature of the B500 Credit Line.

Unlike a regular HELOC, the Interest Rate for the B500 is a Fixed Rate, not a Variable rate, and never fluctuates with the changes made by the Banks to the PRIME RATE.




WHY DO I NEED A LAWYER TO ISSUE MY BUSINESS 500 CREDIT LINE?


Since the Business 500 Credit Line is secured against the equity of your home like a HELOC, the security needs to be registered by a Lawyer as a Mortgage.

We work with a number of reputable Law Firms & have arranged even negotiated a reduced fee for West Liberty clients. They also provide Mobile Signing Services for your convenience and will meet you at your Work or Home to sign the legal documents.




CAN I WITHDRAW MONEY FROM THE CREDIT LINE WHEN I MEET WITH MY LAWYER OR DO I HAVE TO WAIT FOR VISA CARD TO BE SENT TO ME?


You can request to withdraw any amount by the Lender. Those funds can to be issued to you via BANK DRAFT by your Lawyer on closing.





Fees & Costs

I HAVE BEEN APPROVED FOR A $300,000 B500 CREDIT LINE, WHAT ARE THE COSTS ASSOCIATED WITH ACTIVATING IT?


There are no Upfront Fees to Apply or to be Approved for the B500 Credit Line. After the Approval is issued to the client the following are the costs associated to activate the Credit Line Visa.

  • Home Appraisal
  • Legal Fees – Can be charged to the Credit Line
  • Processing Fees – 2.99% of the Limit and can be charged to the Credit Line




Do I need to order an appraisal for my home? How much does it cost?


Yes. An appraisal is always required when a property is being used as security for a Credit Line. But we only order an appraisal after we approve you for the Business 500 and you accept the rate and credit limit.

The appraisal is mandatory to advise the lender of the value of your home. Note: The credit limit on your card may increase / decrease depending on the value reported by the appraiser.




HOW IS MY MONTHLY PAYMENT CALCULATED WHEN I DRAW MONEY OR MAKE PURCHASES USING MY BUSINESS 500 ELV?”


The Monthly Payment for charges on the Realtor ELV is dependent on the Interest Rate that you qualified for. The breakdown is as follows:

  • For Rates Between 4.99% to 5.99% the Monthly Payment is 0.75% of the Balance.
  • For Rates Between 6.99% to 9.99% the Monthly Payment is 1.00% of the Balance.

It is important to remember that there is NO Annual Fee or Monthly Fees for the Business 500 ELV. What’s even better is that you only make payments on the credit used. Plus, there is a 21-Day No Interest Grace Period when you use your ELV to make purchases.




Are there any Monthly or Annual Fees?


No. There are NO MONTHLY OR ANNUAL FEES.




The interest rates offered range from 4.99% - 9.99%. How is my interest rate determined?


Determining what Interest rate you are approved for depends on numerous factors.

The main considerations are: Credit Score and History, the Loan to Value of the B500, and the marketability of the Property.

It's our job to get every client the lowest interest rate and the largest Credit Limit amount possible.




Is there anything else I should know about this Credit Line VISA?


Registered trademark of Home Trust Company. *Visa Int./Home Trust Company, Licensed user of mark. Each mortgage application is subject to approval based on its own merits in accordance with Home Trust’s policies and guidelines. The rate used to calculate the GDS and TDS ratios for all mortgages will be the greater of the contractual mortgage rate or ELV rate (offer rate) plus 2% or the five year benchmark rate published weekly by the Bank of Canada. Product may differ or may not be available in Quebec. You can qualify for up to 80%1 of the value of the property, minus the balance registered mortgages. Total Home Equity Line of Credit on Residential Real Estate cannot exceed 65% of the value of the property.

Visa Auto Rental Collision/Loss Damage Insurance: The Visa Collision/Loss Damage Insurance program is underwritten by Royal and Sun Alliance Insurance Company of Canada and is provided by a group policy issued to Visa Canada Association. Complete terms and conditions, including exclusions and limitations, are outlined in the Certificate of Insurance provided with your card.
2 The Visa Zero Liability Policy for protection against fraud: Certain restrictions, limitations and exclusions apply. The Visa Zero Liability policy protects Visa cardholders who have a Canadian issued Visa card and experience fraud through unauthorized use of their card. Visit www.visa.ca for more information.
3 Purchase Security Insurance, so you can shop at ease: Purchase Security insurance is underwritten by Royal Sun & Alliance Company of Canada. Complete terms and conditions, are outlined in the Certificate of Insurance provided with your card.





Appraisals

I THINK MY HOME IS WORTH $100,000 AND I AM MORTGAGE FREE. BASED ON THAT VALUE, I WAS APPROVED A $65,000 BUSINESS 500 CREDIT LINE. I AM TOLD I NOW NEED TO ORDER AN APPRAISAL, WHY DO I NEED TO ORDER THAT AND WHO PAYS FOR IT?


A proper Appraisal needs to be ordered so the value of the home can be verified and to ensure that the property is in good condition to qualify for the Credit Line.

The Cost for the Appraisal is always paid upfront by the Client, but for Credit Lines over $300,000 the Appraisal Fee (up to $500) will be reimbursed to the client within 5 Business days after the B500 Credit Line is registered.




I WAS PRE-APPROVED FOR A $65,000 (65% LTV) BUSINESS 500 CREDIT LINE. WHAT HAPPENS IF THE APPRAISED VALUE OF ME MY HOME COMES IN HIGHER AT $120,000 OR LOWER AT $80,000?


If the Appraised Value of your home is higher at $120,000 then we can increase your Credit Line upto 65% LTV or to $78,000. If the Appraised Value of your home comes lower at $80,000, then we would decrease your Credit Limit to 65% of the lower value, or to $42,000.





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SafeBridgeFinancial.com

Broker License #10524

B: (416) 466-5858

F: (416) 466-5855

M: (416) 879-7777

12-25 Scarsdale Road

Toronto, ON. 

M3B 2R2

© 2020 West Liberty Financial | Apostolos Sigalas, Broker #M08005291