Canada, in general, has a very open and embracing attitude towards new businesses. The government openly encourages young people to start businesses to serve a social, community or environmental need. There is also plenty of private and government support afforded to aspiring entrepreneurs. However, there’s one aspect of starting a business that most aspiring entrepreneurs struggle with: finding funding.
Funding a business is not easy anywhere in the world. However, motivated aspiring businesspeople have several avenues to fund a new venture in Canada. Here are several funding options that those who want to start a business in Canada should try:
Most aspiring entrepreneurs try to cover at least some expenses of starting a new business with their personal savings. Saving money for business can save new companies hefty fees as loan interest. Also, it can give full control of the company to the founder. The problem is that this option is mainly limited to older entrepreneurs who have had time to work and save money. Young entrepreneurs might need to seek funding elsewhere.
Credit cards are a popular way to pay the bills of a new business among young entrepreneurs. If you are young and don’t have a fulltime job, a credit card can be useful in covering expenses until business takes off. Some credit cards are designed for business use. This is an effective option many entrepreneurs might want to try in addition to considering other sources of financing.
orrowing Money from Friends and Family
Those who have little or zero personal savings can turn to friends and family for the money needed. Some relatives might provide small loans free of interest. Other relatives might give money in return for shares or stocks. If you are an aspiring entrepreneur concerned about predatory lenders and investors, this is a good option to keep the company firmly under your control from the start.
Bank loans are the most popular way of financing new businesses in Canada. Banks and large lending institutions offer loans especially for aspiring entrepreneurs. They usually come with reasonable interest rates and moderate flexibility. An applicant, however, might need to show business acumen, experience and an ability to keenly run a business before getting approval for a loan. Banks also seriously consider documents like credit reports. Those who are deeply in debt or have a history of financial delinquency will most likely be denied a business loan.
Though banks offer reasonable interest rates, they can still be high. For some aspiring entrepreneurs, government loans could provide an alternative. If your business is going to be headquartered in a rural area, or if you are a member of an underrepresented segment of society, you may qualify for certain government loan programs.
After loans, private investments are the most popular way to find capital to start a business in Canada. Angel investors can help just about anyone start a company. After all, companies like Facebook and Google formed only thanks to private investors who took a chance. Private investors tend to be more lenient than banks when it comes to offering funds. However, there’s a big caveat. Private investors want to see unique inventions, and also reliable characters who can run a company without snafus.
Last but not least, crowdfunding is the other option to find money for your business idea. Crowdfunding is not only good to get money; it can also double as a PR event. Aspiring business owners can easily go to a website like Kickstarter to launch a crowdfunding campaign. The only issue is that many users expect see something, not read about your soon-to-be company’s future goals.
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