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Are you planning to launch a startup? Then it would help if you had enough cash to fund this business idea. Getting started with a new business can be challenging, especially when there is not a high approval rate, but you can be proactive, search the internet for “loans for poor credit Canada” and think about all possible options to fund your venture. Where can you find the money for your startup in Canada? Keep on reading to learn more about government grants, angel investors, and bank loans.
How Much You Need to Launch a Startup
Financing a new business is an essential part of reaching success. You need to get ready for various expenses, recurring and one-time business costs. Running your own business may be a dream for thousands of Canadians, but you need to take some time and learn about your financing options. To calculate how much you will eventually need to have a business, take into account the following:
- Working capital or initial cash flow. It is needed to fund all the costs and overheads till you begin making a profit.
- Startup expenses. Such costs include permits, building renovations, rent deposits, computers, vehicles, licenses, insurance, supplies and equipment, inventory, employee recruitment, advertising, and marketing needs.
How to Finance Your Startup
There were 1.22 million employer businesses in Canada as of December 2020. Of these, 1.2 million were small businesses, 22,725 were medium-sized businesses, and 2,936 were large businesses. The majority (over fifty percent) of small employer businesses are concentrated in Quebec and Ontario.
Besides, there are a lot of small businesses in Western Canada. For instance, there were 187,697 small ventures in British Columbia in December 2020. Prince Edward Island is the province with the largest number of businesses per thousand individuals aged 18 and over (48.7 percent).
Are you looking for the most suitable options to fund your startup? Here is what you should consider.
1. Personal Investment
You need to invest some of your money if you are about to take out a crediting tool. This investment can be in the form of collateral or cash. Many business loans are secured, so you need to present some guarantee to the lender. Collateral or cash will prove that you are committed to your business idea.
2. Business Development Bank of Canada (BDC)
It is the only bank in Canada that exclusively serves business owners. The government of Canada owns BDC. This bank offers to finance small ventures and startups and provides up to CAD 100,000 in just 48 hours. You can easily submit a quick web application. The loan is offered at a reasonable interest rate, and you don’t need to cover the application fee.
3. Angel Investors
Who are angel investors, and how can they help you with your startup? They are retired company executives or wealthy people who want to invest directly in startups and small companies.
These leaders make large contributions in their own fields and share their knowledge. They can offer startups or small ventures financial assistance and provide up to $100,000. On the other hand, if you are given this money, the angel investor has the right to supervise the management practices of your venture.
4. Government Programs and Grants
The Canadian government offers a variety of loan programs and grants to finance small businesses in different communities and industries. You can visit the official website of the Canadian government to search what grants and programs are offered in your sphere.
Besides, you will get to know the eligibility criteria and whether you qualify. Canada Small Business Financing Program (CSBFP) is another relevant program that provides business loans of up to CAD 1 million. You may utilize the funds to expand an existing venture or launch a new business.
5. Business Loans
You may apply for a business loan. It can be obtained at a brick-and-mortar bank, a credit union, or an alternative lender. Small entrepreneurs and medium-sized business owners will benefit from business loans the most.
If you take some time to compare lending offers, you will notice that each service provider has its own perks and advantages, from customized debt payoff process to personalized service. Find the crediting company with affordable rates, and many business loans are secured and require collateral.
If you have a good credit score and a clear business plan, your application for a business loan has high odds of approval.
6. Non-profits and Other Organizations
Apart from the mentioned options, you can also turn to community-based companies and non-profit organizations. They can be helpful when it comes to business financing. Only some entrepreneurs can qualify for this monetary aid as these companies serve particular demographic groups.
Futurpreneur Canada Finances is a national non-profit company. It offers mentoring assistance and monetary aid to business owners aged 18 to 30. This organization has been around for over 20 years and still offers unsecured loans to entrepreneurs.
7. Business Incubators
Business accelerators or incubators typically concentrate on offering assistance to new ventures and startups in the high-tech sector. You may also find local economic development accelerators. They are concentrated on sharing and hosting services, revitalization, and job creation.
These incubators invite entrepreneurs to share their premises and other resources. For instance, a new venture can be offered to share laboratories to test and develop its own products and save on costs before production starts. You may take advantage of business incubators for a period of two years.
Startups and ventures in the sectors of industrial technology, multimedia, information technology, or biotechnology can receive this type of financial aid. Not many startups succeed in the first years, but those supported by a business accelerator have higher success rates.
The Bottom Line
You need financial support if you are a small business owner who wants to grow your venture or an entrepreneur willing to launch a startup. Whether this support is in the form of a business loan, a government grant, or an angel investor, you have enough options to choose from. More than that, you may try to get monetary assistance from a non-profit organization or a business incubator or turn to the Business Development Bank of Canada.
