Funding and Investment Institutions You could get funding or financial assistance in a number of ways that I have listed below. Note that different organizations have different requirements and you will want to read through them carefully to understand the ins and outs better. You should also conduct further research on your own. I have hence added links are referenced websites where possible that you may read on further.
Government funding The government offers a number of financing options to entrepreneurs.
Loans & Grants
First among these are loans such as the BDC Small Business Loan, conditional grants and subsidies to borrowers. Grants need not be paid back. However, you must be sure to use the money for its contractually intended purpose. If you go wasting this money or using it for things other than what was agreed, you will have to pay it back.
Subsidies may be offered on things like taxes and wages. If you are having trouble paying certain taxes you may seek such subsidies. Wage subsidies are very helpful. If your business needs more staff but you are unable to cover the entire cost, wage subsidies go a long way in covering this. For more information on wage subsidies in your location, visit http://www.cfib-fcei.ca/english/article/3037-reduce-your-wage-costs-see-if-wage-subsidies-can-help-pay-your-staff.html
The government also offers guarantee on loans to help you secure loans from banks or other lending firms. Canada Business Network lists a number of programs that will help with financing a business loan or providing guarantee where required. Some of these programs, though region specific are Community Futures Program (Ontario), Eco-Financing, Export Guarantee Program; among others.
Debt financing
This is pretty much like borrowing from a commercial bank. A financing firm will give you a loan based on your credit worthiness that you are to repay with interest within a given period. The good thing about this kind of financing is that the lenders take no stake in the business and the interest rate and payment period have already been agreed upon. There are multiple options here including commercial mortgages, asset-based finance or microcredit. For a small start-up business that does not require a lot of money, the best loan to seek would be a microcredit loan. Since the amount being borrowed is not a huge amount, some firms do not require it to be backed up by collateral. In other words, you may take an unsecured loan. However, your business plan has to be a solid one. Commercial mortgages help you expand your business by financing the purchase of land and buildings for the business. Asset-based is where you allow the assets you have finance any business expansion idea you may have by leasing out your equipment for a given period. Note that leasing is not selling and you will therefore still be in possession of your assets as you secure financing.
Equity Financing
This differs from debt financing in that the loan is not paid back but the borrower instead gets equity, meaning shares, in the business. Unlike with debt financing the borrower will not be able to äóìdo away withäó the investor after payment since they will be a permanent shareholder in the business.
Angel Investors
These are people who will invest in your businesses if it looks more profitable to them than other businesses. These people are already successful businesses persons with a lot of experience and wealth. Angel investment groups include the National Angel Capital Organization and Network of Angel Organizations in Ontario. However, seeing as these are successful business owners, they are not easy to find. You will have to do a lot of networking in order to be introduced to one or a group of them.
There are websites that help connect entrepreneurs with potential investors and this could go a long way in securing the financing you need for your business. The first website you should visit is the Canadian Investment Network. The company is known as Dealflow Solutions Ltd and its investment network has over four hundred investors waiting to be blown away by your proposal. You could be just a click away from the financial breakthrough your business needs. Another option is the BC Angel Forum. On these websites, you first register as an entrepreneur. Once you have done that, you must post your business proposal stating the amount you seek, what it is for and what benefits investors will have in your business. This is just like pitching a proposal in a boardroom except you do it online. You must ensure to make your proposal as alluring as possible. Your business plan must be solid and show immense profit potential. You donäó»t want to lose this chance simply because you did a shoddy job on your proposal yet your idea is excellent.
Venture Capitalists
They differ from angel investors as they are an investment group or company and thus have more money to offer though they may demand a higher stake in a company. Venture capitalists prefer to work with already established businesses and very rarely finance start ups unless the business has already acquired massive support and is high end. However, you should still pitch your idea and make sure to sell it. Examples are BDC Capital and Venture Capital Action Plan.
Now that you are aware of the various financing options available to you, choose the most suitable for you and your business. You should also have a clear understanding of all legal aspects and implications. Contact a business lawyer in Toronto or your nearest location for advice.
