When you are looking into applying for a loan for your business, it is important to understand the different avenues of financing.
Banks and Other Financial Institutions
The most common source of financing for small business is the chartered bank. Banks can provide a number of financing options, such as short-term loans, long-term mortgage loans and, in some cases, loans against inventory or accounts receivable. Other important sources of financing in this category include trust companies and credit unions.
Credit Cards and Personal Lines of Credit
For very small firms and home-based businesses, credit cards and lines of credit often provide a ready means of obtaining small scale debt capital. While convenient, they bear relatively high rates of interest and limit the amount of capital available.
Partners and Business Angels
Angels are simply wealthy individuals who invest directly in small firms owned by others. Angels tend to finance the early stages of the business. Attracting partners who make an investment in the business is also an option.
Institutional venture capitalists are among the more important sources of risk capital. Venture capitalists are usually private or publicly sponsored pools of capital that acquire a level of participation in the firm applying for financing. Venture capital can be an effective means of enabling the growth potential of the firm.
Business Financing Options
CFDCCK is a one-stop resource for one-on-one business planning, financing, coaching and counselling. They offer business loans of up to $250,000.
The Business Development Bank of Canada is a federal Crown corporation wholly owned by the Government of Canada. Its mandate is to help create and develop Canadian businesses through financing, growth and transition capital, venture capital and advisory services, with a focus on small and medium-sized enterprises.
Futurpreneur Canada supports young entrepreneurs with up to $45,000 in financing, an expert business mentor for up to two years, and resources to help you plan, manage and grow your business
Guides to Available Programs:
Ontario Business Program Guide - The Ontario Business Program Guide is a searchable resource to government-funded programs and services for Ontario businesses.
Canada Business Grants and Finances - An Internet resource for locating traditional and alternative sources of small business financing. This site provides interactive access to objective information on appropriate forms of public and private sector sources of debt and equity financing.