Starting a new business could be both exciting and daunting. It’s a chance to build something you are passionate about.
Small business ventures offer significant contributions to the Canadian economy. They comprise nearly 98 percent of all Canadian businesses, employing 67.7 percent of the total labour force.
However, finding the necessary resources could be challenging, mainly if you have limited business experience.
Bank loans are a popular method of financing small business startups. However, these loans often have long lists of requirements that not every entrepreneur can accomplish.
Capital is essential to establishing any business venture, big or small. We have seven alternatives to traditional bank loans below if you need additional funding.
1. Personal Investment
Many aspiring business owners have themselves as their first investor. As you develop your business idea, you can save enough money to serve as your startup capital.
Depending on your business plan and the industry you plan to enter, your savings might not be enough to cover all necessary expenses. This financing method will likely require additional capital through other sources.
However, a substantial personal investment helps build credibility. It could help attract investors and potential business partners in the future.
2. Love Money
Love money is capital given or lent by people in your personal circle. These people often include family, friends, coworkers, and other supporters.
However, it is essential to note that, like a personal investment, love money might not amount to a lot.
You should also consider the terms that family and friends offer. Some might establish an interest rate or want part of your business profits.
Think through these terms carefully and decide whether love money is a suitable funding source.
3. Personal Loans
If traditional business bank loans aren’t available, you could take out personal loans from other sources.
You can easily find creditors that offer personal loans online with minimal requirements and convenient application processes. Just make sure you read through the loan terms and agreement carefully before signing anything.
4. Venture Capitalists
Venture capitalists are groups that offer business capital in exchange for equity or partial ownership of the company. These groups are often drawn to tech startups or other businesses with high growth potential.
Aside from financing, venture capitalists could also offer essential business guidance as they have experience working with and growing other companies.
5. Angel Investors
Angel investors, sometimes called angels, are wealthy individuals or former business executives who invest in new or smaller businesses.
Unlike venture capitalists, angel investors have a more personal approach. They are more likely to invest in early-stage companies that might not yet demonstrate the growth potential that venture capitalists require.
Crowdfunding allows businesses to pool investments from several sources instead of just a few significant investors.
Businesses often employ this method during the development stage. You pitch an idea and share your crowdfunding link to your networks.
Indiegogo, GoFundMe, and SeedInvest Technology are popular crowdfunding platforms for many small businesses and creators.
Depending on the industry you plan to enter, your business may qualify for grants from the government or other institutions.
You can browse the Business Benefits Finder to find different government grants that suit your business. Qualifications vary widely. Some are location-based, while others offer support to specific industries or advocacies.
Starting a new business from scratch is not easy, especially when finding the financial resources to realize your business ideas.
Creativity and resourcefulness are valuable traits for any entrepreneur. If one method doesn’t work, there are several other alternatives to explore.