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If you're running a young tech start-up or starting a different kind of new business with operating costs, you may be looking for someone - a venture capitalist or a bank - to back you. But as you likely already know, those who can help you need to see evidence of your abilities before they write you a cheque.
Your small business needs more than a great idea and a catchy name to secure funds. You need documentation of your financial situation and your business plan. The financial paperwork that comes with owning a business is vital. The lender wants to see your financial history - and you need to present that information professionally. A great place to start is with a financial management solution like Quicken Home & Business or QuickBooks, which offer slick reporting tools that help you look more professional.
You'll also need to show potential lenders your business plan. Take time developing a business plan that is comprehensive and persuasive. Include a marketing budget, operation costs, cash flow projections, market competition, risk assessments, and bank statements. Your business plan should help you and the lender see the big picture for your business - not get lost in the weeds.
When you're ready to present yourself & your business, consider some of the following options for finding funding.
1. Banks
This seems the obvious choice. The Financial Post reports that Canada's banking system has an 80% approval rate for small business loans. Make sure you research different financial institutions, including credit unions. Each will offer a range of borrowing options - from leases and mortgages to credit cards and lines of credit. Lenders are supposed to consider the risk involved rather than the size of your enterprise, which can make it difficult for some riskier businesses (i.e., those in unproven industries). If your bank can't take a risk with you, remember: there are legitimate alternatives to the traditional bank loan.
2. Government Loans and Grants
General programs and targeted programs are available to Canadians.
General Programs:
The Canada Small Business Financing Loan offers up to $500,000 for start-ups or existing businesses that want to expand – that includes buying land or other business premises – or to make improvements to your business’s venue. You can apply through a bank or credit union of your choice. For more information, check here with Industry Canada
The Business Development Bank of Canada offers unique programs. For example, the Co-Vision Start-Up Financing Program offers up to $100,000 for start-ups (in the first 12 months of sales). This loan covers such things as marketing costs, start-up expenses, asset acquisition, or franchise purchasing. Check out this site for more
Targeted Programs:
There are a variety of federal programs designed to meet the needs of Canada’s diverse population. Loans are geared towards women, First Nations, young entrepreneurs and new Canadians. Owners of start-ups (two years in business) and those with growing businesses can apply. Some loans support specific sectors such as agriculture.
To learn more and see if you qualify for a loan or grant, use this Grants & Loans Wizard or get general information about small business grants
3. Micro Loans
No credit history or collateral? Micro-lending is gaining popularity as a way to spur entrepreneurship that includes all economic strata. Loans are small at around $15,000, but the success rates are consistently impressive.
For example, Western Economic Diversification Canada offers micro loans to small businesses in cities west of Ontario.
4. Community Investment Funds
There are non-profit organizations across the country that help local entrepreneurs when appeals to traditional lending institutions fall through. Find more info here
5. Venture Capitalists You Already Know
Finding venture capitalists (VCs) to invest in your start-up (i.e., tech start-up) can be challenging outside the Silicon Valley. But why start with the big guns first? Reach out to your network - your friends & family, at minimum - to see if they know anyone who invests in projects like yours. Join an entrepreneur association to extend your network... and extend your reach to VCs.
This article from the Wall Street Journal (June 2, 2010) explains how you can move from a small business to a proven worthy investment that garners the attention of VCs in Canada, in the US, and beyond.
If you want to get financing, you will need to show you're organized with your money. And, when you get that financing, you'll need to track how you use it - and how you pay it back - accurately. For all matters related to managing your small business finances easily & accurately, trust Intuit QuickBooks software, used by over 4.4 million people worldwide.
Try QuickBooks Pro, and get organized so lenders will know you're serious
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