Startup Financing: How Can The Government Help You?

by John Burke

2 min read

A new business venture presents a number of boundless opportunities, and it also creates some justified anxieties. Obtaining financing stands out as one of the many obstacles faced by new business owners. Personal savings, as well as conventional bank loans, are valid funding options available to upcoming entrepreneurs. Grants and loan programs sponsored by the Canadian government are other viable means of raising capital when personal and commercial possibilities seem out of reach. For a much-needed cash infusion, take a closer look at these small business lending plans and their requirements.


Numerous grants are available for business funding, some of which apply only to specific provinces. One option available nationwide is the Industrial Research Assistance Program. This plan is aimed at small- to medium-sized companies that seek to research and develop new technologies and bring them to market. In one scenario, financial contributions, which are not required to be repaid, cover up to half of total project costs. Alternatively, the organization could choose to tap the resources of business and technical advisors who specialize in the specific industry involved. To qualify, the business must be incorporated, have fewer than 500 employees, and exhibit the potential to expand and show a profit. Applicants must also undergo a review with an Industry Technology Advisor. These individuals analyze management commitment and capabilities, along with the financial ability of the company to bring the project to completion.

Loans and Cash Advances

The Business Development Bank of Canada offers small business loans of up to $100,000 that can be closed in as few as five days. Making the option even more appealing, the whole application process can be completed online without any application fees. Proceeds for startups can be used to purchase equipment, fund business development plans, or acquire a franchise. Criteria for eligibility includes the existence of a legitimate business plan, a solid management structure with relevant experience in the industry at hand. These loans offer a variety of repayment options tailored to meet the needs of the business. Repayment periods can be extended and interest-only payments can be made in the initial stages of the loan. Seasonal businesses can also design repayments to increase during peak periods and decrease when revenues taper off.

Guaranteed Loans

For those businesses that have difficulty in obtaining loans from traditional financial institutions, the Canadian Small Business Financing Program works in conjunction with those lenders to secure financing. New business owners can visit a bank, credit union or a caisses populaire to walk through the application process. This program assesses a registration fee of 2% of the amount funded, and business owners can choose between fixed- and variable-rate options for repayment terms. It is important to note the sole decision to provide lending rests with the financial institution. Proceeds can be used to make improvements to leased property or acquire buildings. Farms are not eligible for this program, but these concerns can pursue similar options through the Canadian Agricultural Loans Act.

References & Resources

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