OVERVIEW – Information on start up business loans in Canada . Startup financing comes with numerous challenges . Here are alternatives to the entrepreneurs’ funding obstacles
Start up business loans in Canada solicits strong opinions from Canadian entrepreneurs / business people. A large part of that opinion revolves around the challenges and frustration facing startup financing needs. That’s where a 2nd opinion might just help… let’s dig in.
The majority of startups, in the mind of the entrepreneur, require ‘ loans ‘. While not always the case (and we’ll talk about that) the harsh reality is that Canadian chartered banks rarely provide self standing start up loans. Why is that the case? One of the reasons is simply historical failure rates in this type of venture; the other reason is even more basic: firms in business with a history have a better survival chance.
We sometimes forget our banks our regulated and are protecting our deposits at the same time they are lending. Larger more established lending opportunities represent larger more predictable bank profits.
So where do entrepreneurs typical go when they are raise capital? Top experts tell us those funds come from:
– Personal Equity
– Bank loans (Supported by personal collateral!)
– The proverbial friends and family
– Credit cards (business, and unfortunately – personal)
So what then are the ‘ realistic’ options for entrepreneurs? Personal equity is always important, and any traditional or alternative finance solution will probably demand some level of personal investment. We’ll add also that some level of reasonable personal credit history is an important part of the start up equation. Personal credit bureau scores of 650 are desirable.Every adult should know their credit score.
Suffice to say that partial of full personal guarantees are required for any type of initial financing of the business.
The Canadian Govt Small Business loan is perfectly suited for start ups – it provides financing for loans up to 350k for equipment and leasehold improvements. Close to 8000 start up and relatively new businesses access this capital in Canada every year.
Other financing sources include:
Tax Credit Financiers (typically SR&ED claims are financed)
Invoice financing companies
Revenue / Royalty based finance options
We wish we had a dollar for every hr. some of our clients spent chasing VC/PRIVATE EQUITY/CAPITAL POOL solutions which are in truth only attainable for less than 1% of all start ups . Having a business plan that focuses on cash flow and repayments, not ‘ hockey stick ‘ sales projections also helps!
While many business folks search for ‘ 1 ‘ solution for their start up financing needs in Canada the more proper approach is to cobble together a solution from multiple traditional or alternative sources . Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with start up business loans that make particular sense for your needs.
Blog posted by Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN STARTUP FINANCING LOAN EXPERTISE
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Canadian Business Financing