Banks & Credit Unions
Many Canadian banks and credit unions offer startup business loans through the Canada Small Business Financing Program (CSBFP). This government-backed loan provides up to $1.15 million for eligible businesses with revenue under $10 million (excluding farms).
Alternative Lenders
Alternative lenders provide another route for financing if you don’t qualify for a traditional bank loan or need faster funding. These lenders are more flexible in terms of eligibility but generally require at least three to six months in business and a minimum monthly revenue of $10,000 to qualify for a startup loan.
Personal Loans for Startup Funding
If your startup isn’t making enough money yet to get a business loan, you can try applying for a personal loan from a bank, credit union or alternative lender. Personal loans rely on your personal credit score or assets, separate from your business. This gives you more freedom in how you use the funds, but you’re personally on the hook for repayment if the business fails.
Business Loans From Business Development Bank of Canada (BDC)
Canadian startups operating for 12 to 24 months and generating revenue can apply for funding up to $250,000 through the Business Development Bank of Canada (BDC). You can delay principal payments for up to a year and get an extended repayment schedule that aligns with your cash flow cycle. For startups in earlier stages (less than 12 months old), you can apply for a business loan from one of BDC’s partners.
Startup Grants in Canada
Government grants may provide financial assistance for startup businesses in specific industries or community groups. Startup grants are available for research and development, exporting, hiring and wage assistance, marketing activities and workforce training. Unlike loans, grants typically don’t require repayment.
Business Startup Loans From a Group of Individuals
- Peer-to-peer lending: Apply online for funding from individuals or corporations. Approvals are quick but be prepared for high interest rates.
- Equity investments: Get capital from investors in exchange for partial ownership (equity) in your company. This avoids debt but requires sharing profits and control of your company.
- Friends and family: Borrowing money from friends and family can be an option, so long as everyone is on the same page about how and when you will pay them back.
- Crowdfunding: Raise capital online from investors who buy a piece of your company (equity offers) or receive perks for their contributions (rewards-based campaign).
Business Credit Card
Business credit cards are a flexible financing option for smaller startup costs and ongoing operational expenses. Plus, your purchases earn cash back or points for travel and other perks. Some of the best business credit cards offer an interest-free grace period on new charges to help maximize your cash flow.
Business Incubators
Business incubators provide free workspace, training programs and other resources that can significantly reduce startup costs. Some incubators operate as non-profit organizations, while others provide seed capital for equity positions.
