How to Find Financing for Your Small Business in Canada
Starting a business and need some cash? Here’s a quick guide for small business owners on the best ways to finance your business.
There are over a million small businesses in Canada. If you ask those business owners, a lot of them will tell you that financing their business was one of the biggest challenges. Raising cash is not an easy task. Whether you are looking to start a business, working capital, asset purchase or expand and increase the range of products and services. These funds will go a long way in making sure your business survives in the first year and can weather future financial hard times.
Some small business owners might find financing their business from their own pockets by using their savings and selling some other assets. If that’s not possible for you, here are other options you can tap into to get for the finances you need instead.
Small Business Grants
Getting a grant for your small business start-up can be challenging, and many grants come with strings. Still here’s a list available small business grants in Canada. It’s far more likely to obtain a small business loan rather than a grant.
Small Business Loans
If you can’t get funding from a business grant – or from your own savings, or friends and family – getting a loan from a bank is the next logical option. When you decide to get a bank loan, it’s essential to understand their terms before taking the loan.
Loans are a great way to finance your business, especially in handling cash flow shortages. Getting a loan from the bank for a small business can be difficult if your business still has limited experience in the market.
Another option is the federal governments sponsored programs that fund start-up businesses, such as the Small Business Financing Program. The SBA doesn’t make loans to start-up businesses, instead they guarantee a portion of the loans a start-up applies for through banks, insurance companies, and pension funds. This makes it easier for start-ups to secure bank loans when otherwise the banks would not be willing to loan the money.
Angel Investors
If you’re willing to part with some equity, find an angel investor. An angel investor (also known as a private investor, seed investor or angel funder) is a high net worth individual who provides financial backing for small start ups or entrepreneurs, typically in exchange for ownership equity in the company.
Giving up some part of your company may seem like not being an excellent idea, but there’s more than meets the eye. In addition to providing money, they also bring expertise and guidance to the table, which is difficult to find anywhere else. To get a good investor, you must show growth potential and sound business plan.
While finding angel investors, ensure you engage the services of financial attorney or accountant when it comes to equity sales.
No matter what point you’re in your business, you will need funding to ensure you don’t miss out on growth. Contact us for strategic insights to drive your progress.
A Line of Credit
While a line of credit should never be your sole source of start up money, a line of credit can be a powerful tool during this phase of your business. A LOC can help you with unexpected expenses and is a great tool for establishing your credit rating.
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