Getting Grants and Loans to Finance Your Small Business
You’ve always dreamt of starting a business. Your friends always say that you’re full of entrepreneurial ideas. However, it takes more than ideas and dreams to start a company. You need financing to turn your vision into reality. Below are some ideas about getting funding to start your small business.
SMALL BUSINESS GRANTS
Let’s say that you’ve come up with an idea for an app that alerts shoppers to the deals they want most in real time. You have some money of your own that you can invest in this project, but you know you’ll need more to bring it to market.
The Canadian government might be able to help. It offers grants to small businesses. There are some important things to remember about these grants, though. Firstly, many of them are region specific. So, if you are interested in research and development vouchers available in Newfoundland and Labrador, you must live in that province to qualify. Secondly, the Canadian government earmarks a number of these grants for specific groups. For example, there are many Canadian small business grants designated for Aboriginals. Thirdly, the government prioritizes funding opportunities for certain types of companies, especially those at the forefront of technological innovation. Your mobile app, for instance, could qualify you for a small business grant.
SECURING A LOAN TO MAKE YOUR ENTREPRENEURSHIP IDEAS A REALITY
You probably won’t be able to rely solely on business grants from the government to bring your mobile app to market. Those grants aren’t your only funding option, though.
The Canadian and provincial governments also offer small business loans. As with grants, some of these loans are meant for specific types of small business owners. And if you qualify, the loans still might not be enough to get your venture off the ground.
Many small business owners turn to private sources of financing to make their ideas for entrepreneurship come to life. Private sources of financing refer to sources aside from the government, your family, your friends, and yourself. These include banks, capital funds, merchant bankers, insurance companies, and commercial mortgage lenders.
NON-TRADITIONAL SOURCES OF FUNDING FOR BUSINESS IDEAS
If you’re worried that banks or other commercial lenders won’t appreciate your idea for what you believe will be a ground-breaking app, consider turning to non-traditional financing sources.
Crowdfunding has become a popular way to finance business ventures. It involves collecting small sums of money from the general public (“the crowd”) using social media platforms to advertise your ideas. There are three crowdfunding models: donation, lending, and investment. Under the donation model, donors contribute money out of the goodness of their hearts. The lending crowdfunding model means that funders expect their money back, while crowdfunding investors want a share in your company.
In recent years, a number of online lending companies have entered the Canadian business loan market. There are advantages to choosing an online lender over a traditional lending institution. Online lenders tend to process applications much faster – instead of waiting four to six weeks for a response from a bank, you’ll find out whether you’ve been approved in one to two days. One of the drawbacks of online lenders is that their interest rates can be quite high. You can expect to pay as little as 10% or as much 25% in interest.
Having an idea for a business is just the start of your entrepreneurial journey. Funding is the next step. There are a number of financing options out there – find the right one for you, and your dream will become that much closer to reality.
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About the Author
Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.