In Canada, there are Several Ways To Fund Your Business. Banks like to show the world how they lend money to small businesses thereby patting themselves on the back for the number of small business loans they’ve already provided, the truth of the matter is: they don’t lend out money much because they don’t like to do it.
If you are planning to start a small retail or service business, or you have an idea of any product you want to develop from scratch. Am sure you already know – if you’ve been to a traditional lender, and you have lots of collateral and a good credit record, they might make you a personal loan.
But if you’re determined to get your new business off the ground by all means and have already tapped out all your friends and family, see below for some non-traditional ways of business funding that may interest you.
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The new increasingly popular way for new businesses to get funded is to put your business idea up on the web and ask people to donate money so you can go ahead and do it. Crowdfunding portal has a growing number of websites where you can post your business idea and campaign for funds. The two biggest crowdfunding portals in Canada are Kickstarter and Indiegogo – see their comparism.
Startup accelerators or incubators is another great way of funding your business as most of them provide education, mentoring and money as well.
The downside is that, startup accelerators are very much a tech phenomenon; you’ll be hard-pressed to find such opportunities for businesses in more traditional arenas. Another potential downside is that accelerators offer investment in exchange for equity and you may or may not want to share ownership of your new company.
Compete for funds.
It seems that there is an increasing number of contests that offer money to businesses as a prize every year. The best part of this is that, it also offer things such as access to expertise and training that can make all the difference to a new business.
Financing other companies is the best way for some companies to increase the reach of their own products and secure their supply chains. For example, Whole Foods Market Inc., a U.S.-based chain of natural and organic foods, loaned Molly B’s Gluten Free Kitchen, a Toronto-based family business, $50,000 to buy a commercial oven the Canadian small business needed to expand.
The loan was part of Whole Foods Market Inc.’s Local Producer Loan Program. And Whole Foods is definitely not the only company rendering assistance to finance other businesses. Companies such as Amazon.com Inc. and PayPal are also lending to small companies – and the trend is growing.
If you want to start a new businessess and it is a franchise business, the franchisor you are going into business with may be able to provide you with the financing you need. Instant Imprints Canada and Murphy Business Canada are two franchises that offer such financing and they’re just the tip of the iceberg.
Franchises businesses are easier to finance than other startup businesses. Because there are more traditional lenders willing to loan them money.
One Size Doesn’t Fit All
Some of the funding ideas mentioned above still require you to have the kind of credit rating you have to get a bank loan. Unlike the startup accelerators and others which are only open to new businesses in particular sectors. No matter the kind of business you want to start, the ideas above will at least give you some funding avenues to explore.
You can also see how to deal with a bridge of contract.