In the business world, it is always recommended to use different financing options rather than depending on a single source. This is particularly true when you want to finance a new business. Diversifying your financing sources will allow your new start-up to better withstand potential downturns. Plus, it will improve your probability of getting an appropriate financing option as per your specific need.
You can grasp different financing options if you want to start a business in Canada. Some of the commonly used financing sources are business loans, angel investors, business incubators, and government grants. Each of these sources has specific pros and cons. So, you need to be careful when choosing the financing options for your new business.
Let’s have a look at frequently used financing sources to start a business in Canada.
Table of Contents
1. Business loans
If you are short on personal investment, then you can rely on business loans. You can get a business loan from banks and other financial institutes. If you require a small amount of loan for your new business, then you can also obtain it from your friends or/and family. Small business loans provide an attractive financing option to finance new business in Canada as the federal government supports all those funding programs that encourage startup businesses.
Besides financial institutes, private lenders also offer small business loans in Canada. No matter whether you are dealing with a bank or a private lender, make your business loan application more attractive. An attractive loan proposal will raise your chances of loan approval.
2. Angel investors
Angels are retired company executives or wealthy people who directly invest in new business startups being owned by other individuals. They are the best in their field who not just contribute their network of contacts and experience, but also their management and technical knowledge.
Angels prefer investing their money in new startups between the ranges of $25,000 to $100,000. They usually keep a low-profile. So to contact them, you have to search online or get in touch with specialized associations. NACO (National Angel Capital Organization) helps build competence for Canadian angels. You can look into their members’ directory to get contact details of local angel investors.
3. Business incubators
Business incubators concentrate on high-tech sectors by assisting a new business in different stages of development. You can also find local incubators who support economic development and focus on areas like job creation, hosting, and revitalization services.
Generally, incubators will encourage future businesses by sharing their premises and administrative, technical, and logistical resources. For instance, a business incubator may share its laboratories to allow a new business to develop and examine its products cheaply before starting production. MaRS is a Toronto based innovation hub that provides a list of Canadian business incubators.
4. Government grants
To start a business in Canada, government agencies offer grants and subsidies. The website of Canada Business Network provides a broad list of different government programs at both provincial and federal levels.
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