Notice of Assessment
Navigating the intricacies of commercial financing applications can sometimes feel like deciphering an ancient script for small and medium-sized business (SMB) owners. Among the various documents that lenders may request, the Notice of Assessment (NOA) from the past two years holds a special place. This request might catch you off guard, but understanding its importance and knowing where to find it can significantly demystify the process. This article aims to clarify why lenders ask for your NOA and guide you on where to locate these documents, all the while keeping financial terminologies as clear and straightforward as possible.
Understanding the Importance of the Notice of Assessment
Proof of Tax Compliance: The NOA is essentially the Canada Revenue Agency's (CRA) way of communicating the results of your tax return evaluation after you file your taxes. When lenders ask for this document, they're looking for proof that your business and possibly you, as the business owner, have complied with tax laws. It serves as a seal of approval from the CRA that your tax filings have been accepted and that any amounts owed have been settled or are being addressed.
Verification of Income and Profitability: Beyond compliance, the NOA provides lenders with crucial details about your income and the profitability of your business. This information helps lenders assess your ability to repay the loan. They can evaluate how much money the business makes and, importantly, the consistency of that income over the last two years.
Risk Assessment Tool: From a lender's perspective, financing is all about managing risk. The NOA helps lenders in assessing the financial risk associated with lending to your business. By analyzing the NOA, lenders can get a sense of the financial stability and health of your business, which in turn influences their lending decisions.
Where to Find Your Notice of Assessment
If the lender's request for your NOAs has you scrambling, here's where you can look:
CRA My Account: The quickest way to access your NOAs is through the CRA's online portal, My Account. Here, you'll find digital copies of your NOAs for the past several years. If you haven’t registered for an account yet, it’s a straightforward process that will give you access to a wealth of tax-related information and documents.
Your Mail or Email: After you file your taxes, the CRA sends your NOA either by mail or electronically, if you’ve opted for online mail. Check your physical mail for any CRA correspondences or your email for any communications from the CRA.
Your Accountant or Tax Preparer: If you have an accountant or a tax preparer, they should have copies of your NOAs or be able to access them quickly. This is often the easiest route for many business owners as it also comes with the added benefit of having a professional explain the details of the NOA to you.
Request a Copy from the CRA: If you can’t find your NOA through the above methods, you can always request a copy directly from the CRA. This can be done through your CRA My Account, over the phone, or even by visiting a CRA service point in person, although this might take longer.
Wrapping It Up
The request for Notices of Assessment in a commercial financing application is not just a procedural step; it's a crucial part of the lender's assessment of your business's financial health and your compliance with tax obligations. Understanding the significance of the NOA and knowing where to find it can make the application process smoother and less stressful. More importantly, it can improve your chances of securing the financing your business needs to grow. By approaching your financing application with the right documents in hand and a clear understanding of their importance, you're positioning your business as a credible and trustworthy candidate for financing.