The Road to Growth: Funding Options for Canadian Entrepreneurs

Are you an aspiring entrepreneur looking to launch your startup? Or are you a successful small business owner looking to grow and expand your business? Either way, how you are going to fund your goal is probably top of mind. With the numerous small business funding models available for Canadian entrepreneurs, you may not know which one’s best for you. This post is all about ways small business owners can find financial help to grow, innovate, and succeed.

Fintech

According to Hot Topics, “fintech is usually applied to the segment of the technology startup scene that is disrupting sectors such as mobile payments, money transfers, loans, fundraising and even asset management.”

Companies like Lending Loop and Company Capital are aimed at helping Canadian small businesses grow, by providing small business owners with capital at a fair interest rate. These companies are said to fill a gap for small businesses, which is often overlooked by major banks.

Pros:

Quick application processing

Easy to access capital

Low interest rates

No intermediaries

Cons:

X Lack of regulation

X Higher risk of loss

Check out this article to learn more about the difference between fintech companies and big banks and how they try to suit small business needs, as well as these 10 facts about fintech in Canada.

Government grants

The government offers small business grants to qualifying small businesses, whether you are just starting out or looking to expand. In many cases, however, grants are only available to individuals of a specific demographic who reside in a particular place, and they need to be tied to a certain industry.

Pros:

They do not need to be paid back

Cons:

X Difficult to get

X Restrictions on what you can and cannot use the loan for

The following resources are helpful for finding small business grants:

Venture capital

Venture capital is great for small businesses that are high risk and have a high growth potential. Venture capitalists typically invest in the early stages of business development obtain substantial ownership in the companies they invest in. BDC Capital and OMERS Ventures are some of Canada’s well known venture capital firms.

Pros:

Business expertise

Industry connections

Cons:

X Need a highly innovative new product

X Loss of control

X Minority ownership status

Visit this link for detailed information about venture capital.

Microloans

A microloan is a loan of a relatively small amount that is used to help entrepreneurs start and grow their small business. Microloans are an option for entrepreneurs that need less than a typical bank would lend.

Pros:

Manageable loans

Cons:

X High interest rates

X You may not get as much funding as you need

If you think a microloan is right for you, check out these 20 sources of microloans in Canada.

Crowdfunding

According to the National Crowdfunding Association of Canada, “crowdfunding is the raising of funds through the collection of small contributions from the general public (known as the crowd) using the Internet and social media.”

There are several crowdfunding platforms available in Canada, such as Indiegogo, SeedUps, (***maybe fundable???)

Pros:

Risk is spread among multiple investors

Mentorship from the crowd

Cons:

X Limits your freedom as an entrepreneur

Banks

The most conventional way of obtaining small business financing is through the bank. All of the major banks in Canada offer small business loans, including TD, RBC, BMO, CIBC, and Scotiabank.

Pros:

Maintain control of your business

Multiple loan options

Relatively low interest rates

Tax benefits

Cons:

X Extensive application process

X Numerous prerequisites

Bootstrapping

Bootstrapping is for those who want to succeed on their own first without funding. This typically means relying on savings and early cash flow to get started.

Pros:

No debt

Complete control of your business

Fewer stakeholders

Cons:

X Slow growth

X May not have enough resources

X Personal risk

Check out this article for tips on how to bootstrap your business.

So, whether you choose to go with one of these funding models or a combination of a couple, you should be able to find the small business financing option that works for you!

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