When you are looking into applying for a loan for your business, it is important to study different avenues of financing.
We have included a few brief definitions of various sources of financing, followed by sources of available programs below.
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.
Guides to Available Programs:
Financing Programs Available to Business - A list of the programs most commonly accessed by local businesses.
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.