Being a newcomer to Canada, financing your start-up or business: Entrepreneurs who want to move to Canada to start a business have a number of choices. Once in Canada, foreign business owners may look for money to start their business or help it grow. How foreigners can get money for their businesses will depend on what those businesses need.
Ways to get money
There are many ways to finance a new business or a start-up:
- Personal saving
- Gives (Grants)
- Family and friends
- Loans from banks
- Platforms for crowdfunding like Kickstarter
- Angel funders & venture capital
- Government programs.
Many people who want to start their own businesses will use their own savings to do so. When you use your own money, you have full power over your expenses and how you run your business, and you don’t have to pay anyone back.
Also, putting your own money into your business gives you more credibility and shows possible investors that you believe in it. A grant is a sum of money that a government agency or business gives to a business to help pay for things like research and development, marketing, salaries, tools, and more.
Grants are different from many other ways of getting money because they don’t have to be paid back and the business owner doesn’t have to give up any property. But getting a grant can be hard, and each program will have its own rules about who is eligible.
Taking out a loan
Entrepreneurs may find it appealing to ask friends and family for money because it gives them the freedom to set the terms of the investment and the plan for paying it back.
But if you don’t want money to ruin a relationship, you should always try to explain the risks of investing in your business to friends and family. It would also be a good idea to make and sign a written agreement that helps both parties in the long run.
Canadian banks offer business loans to help with buying new assets, selling or buying another business, getting money for day-to-day activities, or growing the business. When choosing whether or not to give a loan, banks look at a number of factors.
These factors include the type of business, the amount of risk involved, and how much money the business is expected to make.
When getting a loan, it’s important to think about how long the loan is, how much of the total cost is being funded, how flexible the repayment terms are, and what the interest rate is.
Crowdfunding is a way for a business to raise money by asking the public for money, usually in exchange for a share of the business. Most of the time, crowdfunding works well when a lot of people put in small amounts into your business. There are different kinds of crowdfunding, such as:
- Donation- and reward-based crowdfunding is when a company sets a goal for earning money and asks people to donate in exchange for a token or a copy of the product or service that will be made.
- Equity crowdfunding gives investors shares in a company or the right to a share of a product’s sales or income in exchange for their money.
Angel investors and venture capitalists put money into businesses in exchange for a share of the company’s ownership. Angel investors usually give money to businesses in their early stages.
Venture capitalists, on the other hand, give money to businesses that are already making money and have a stable cash flow. One of the best things about these types of investors is that they will give you great help with your business since their own success depends on yours.
You might also want to think about business centres. Most incubators ask businesses with a lot of potential to share their space, where they can get help in a variety of ways, such as advice, networking, and administrative services.
When the business is ready to move on to the next stage of growth, usually after a couple of years, they leave the incubator.
Programs by the Canadian government
The Canadian government gives money to companies, especially those that are innovative in business and technology.
For example, the Canada Small Business Financing Program (CSBFP) is a government-backed program that gives loans of up to $1 million to start or grow a business, or to help an already-established business make a large investment.
The Canadian government owns the Business Development Bank of Canada (BDC), which is a crown company and a national development bank.
They help small and medium-sized businesses by giving them cash, loans, and advice. BDC helps business owners in all fields and at all stages of growth. So far, they have given $47.8 billion to company owners.
Through the regional economic development bodies it runs, the federal government helps small business owners. For example, the Canadian government website says that FedDev Ontario, the federal economic development agency for Southern Ontario, has been given more than $1 billion in new funds.
In a similar way, the Atlantic Innovation Fund helps businesses, co-ops, and research institutions make and sell new goods and services and take advantage of market opportunities.
The province support
Most provinces also help businesses and people who want to start their own businesses. For example, Alberta gives funds and other forms of funding to regions to help their economies grow.
Some of the programs are the Community Initiative Program, which gives money to projects that make communities in Alberta better and more interesting, and the Innovation Employment Grant, which gives money to companies for research and development costs.
Similarly, British Columbia has many grants for small businesses that help with economic growth. Included in this category is the Small Agricultural Business Acceleration Pilot Program, which provides funding for initial capital expenditures to new and small agricultural businesses in British Columbia.
Sources of help
Entrepreneurs can use a lot of helpful tools and websites to do their own study on their funding options.
The Canadian government has a useful tool called “Business Benefits Finder” that lets you figure out what kinds of help are available based on your situation.
The tool gives you a unique list of government financing programs for your business, including public funds to help you start your business and programs for loans and investments in capital. By going here, you can get to the tool.
On the Business Development Bank of Canada website, there is a page with useful tools and articles that entrepreneurs can use when starting a business and looking for funds, as well as for business strategy, planning, entrepreneurial skills, marketing, sales, and more.
The National Angel Capital Organization is a group of private investors, venture capitalists, and schools from all over Canada.
- Canadian entrepreneurs can support their enterprises with personal savings, grants, loans, crowdfunding, angel investors, and government programs.
- Grants provide non-repayable funding for specific business needs, while personal savings provide the business full control and credibility.
- Canadian banks offer business loans based on risk and earnings.
- Donation-based or equity-based crowdfunding involves tiny public donations.
- For creative enterprises at various growth stages, government programs like the Canada Small Business Financing Program and regional economic development authorities provide financial help and expertise.
Q1: How can I finance my startup in Canada as a newcomer?
A1: Newcomers in Canada can explore options like personal savings, grants, loans, crowdfunding, angel investors, and government programs to fund their startups.
Q2: What are the benefits of using personal savings to start a business?
A2: Using personal savings provides complete control over expenses, maintains credibility, and doesn’t involve repayment obligations.
Q3: What are grants, and how can I apply for them?
A3: Grants are non-repayable sums of money provided by government agencies or businesses to support research, development, marketing, and more. Eligibility criteria vary by program, and applications need to meet specific requirements.
Q4: How do loans from Canadian banks work for startups?
A4: Canadian banks offer loans for various business needs, considering factors like business type, risk, and projected earnings. Loan terms, funding amount, flexibility, and interest rates vary based on the bank’s assessment.
Q5: What is crowdfunding, and how can it help finance my business?
A5: Crowdfunding involves raising money from the public, typically through online platforms, by offering rewards or equity in exchange. Donation-based, reward-based, and equity-based crowdfunding are different models to consider.
Q6: Are there government programs to support startups in Canada?
A6: Yes, the Canadian government offers programs like the Canada Small Business Financing Program and regional economic development bodies that provide financial support, loans, and advice to innovative businesses of all growth stages.
- Various Funding Options
- Crowdfunding and Investors
- Government Support
- Provincial Assistance
- Helpful Resources