Pleading Innocent On Knowledge Of Start Up Financing Strategies?

OVERVIEW – Information on start up capital in Canada. Financing a new venture via business loans and other sources is a constant challenge for the Canadian entrepreneur

Start up capital in Canada often presents a combination of challenge and mystery when it comes to financing business loans in the early stages of a business. Are you pleading innocent on that subject? That doesnt need to be the case. Let’s dig in.

Very few businesses in Canada can be started without financing of some sort. The wrong amount of capital is one of the major causes of business failure, especially when those sales don’t materialize

that were part of your revenue forecast.

So what is the exact amount of money needed to ensure the business will have a legitimate chance to flourish. In financial terms you want to be able to both identify (and then reach) your ‘ BREAKEVEN POINT’, which, simply speaking is the point where you’re covering your expenses and profits are in sight.

By the way, we’ll forgo talking too much about cash flow today, but we’ll just point out that revenues and profits don’t equal cash flow, but that’s a subject for another day.

So, back to our quest for capital. Some key considerations for the owner/entrepreneur include:

What does the business plan identify as the need for opening capital on the balance sheet as well as ongoing working capital line of credit needs?

What amount of financing will come from you, the owner?

What assets are required- How will they be acquired (i.e. cash, financing, leasing?)

Are their possible partners in the venture, silent or otherwise?

Will the owner’s personal credit history impair the ability to get all the financing they need

One issue that will quickly come up if the entrepreneur is considering a partner, silent or otherwise , is the fact that giving up a lot of ownership in the business in such an early stage is a costly idea – and that assumes you’ve got a partner you like and can work with!

Proper debt financing, structured with finance that makes sense is a solid solution to maintaining your ownership equity and realizing future returns on your initial investment based on the growth and success of the business

Also, raising money from outside investors has a lot of potential legal obligations to it, many of which aren’t often properly considered by the budding entrepreneur

Personal savings are a touchy subject when it comes to financing your business. Most business owners are reluctant to put up savings and their homes. . We also caution clients to not mix their personal and business credit lives to the extent they can.

So what exactly are the sources of capital for start ups in Canada?

They include:

Lease financing, which is available for start ups by the way

Government business loans – The SBL/CSBF loan can provide 350k of business capital to acquire assets, leaseholds, technology, etc – Key benefits = low personal guarantee, not outside collateral required, solid rates and terms , early pre-payment privileges, etc

Receivable financing

Monetizing your SR&ED tax credits if you’re using this program

Cash term loans from the government crown corporation bank

In exploring all those options you should know the lender/lenders will focus on your experience, the cash flow forecast, and your personal credit history

Don’t plead innocent on start up capital financing alternatives in Canada. Seek out and speak to a trusted, credible an experienced Canadian busines financing advisor who can assist you with business loans and asset monetization that makes sense for your startup success.

Author: Stan Prokop – founder of 7 Park Avenue Financial

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of 90 Million $$ of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:


Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171