4 Types of Small Business Financing

So you have a small business up and running, but there are uncalled expenditures that are piling up on you. Whether you are looking for funding to take care of your additional expenditures or contribute to the growth of your brand, here are four financing options available to Canadian small business owners:

 1. Loans

While it’s harder to get loans from Canadian banks as a small business, there are several alternatives that are available to you.

  • Canada Small Businesses Financing Program: Any starts-ups, for-profit small businesses in Canada with gross revenues of $10 million or less are eligible to apply for loans under this program. The program can offer up to $1 million for a single small business. 
  • BDC Xpansion Loan and Startup Financing Program: For the Xpansion loan your business can receive up to $100,000 in long-term financing, with eligible expenditures including e-commerce, marketing plan, certifications and more. The Startup Financing program is designed to support small businesses during the start or early growth phase. Funding provided can be up to $100,000, which can be used for working capital, marketing, fixed assets. 
  • Community Development Financial Institutions: Microloans can be obtained from local financial institution. The Wester Economic Diversification Canada offers a microloan program that small businesses can get up to $15,000. 
  • Loans for Entrepreneurs who identify as minorities: For Women – The Atlantic Canada Opportunities Agency Women in Business InitiativesParo Centre for Women’s Enterprise, Women’s Enterprise Initiative Loan Program. For Indigenous communities: BDC Indigenous entrepreneur, Aboriginal Entrepreneurship Program Canada and Certified Aboriginal Business Program.

2. Grants

The Government of Canada provides numerous generous grants for business owners, particularly niche small business owners. Finding a grant that your small business is eligible can be overwhelming, try using this new tool on the Government of Canada website that allows you to streamline your hunt for funding.

Here are funding options that the Grants Specialists at EVAMAX focus on:

  • Basic Research
  • Experimental Development
  • Applied Research
  • Small + Mid-sized Technology Innovation Programs
  • Alberta Innovates – Product Demonstration Program
  • Support Alberta-based companies with the opportunity to develop novel and innovative technologies
    • Strategic Innovation Fund
    • Provides repayable + non-repayable contribution to support R&D. growth + expansion of firms in Canada, attract + retain large-scale investments in Canada, advance industrial research through collaboration between academia, non-profit organizations and the private sector

3. Debt or Equity Financing 

Debt financing include the owner or borrower accepts funds from an external source and commits to pay the principal and interest back after a certain period of time. The interest represents the ‘cost’ of money you borrowed. Often there’s monthly payments, for the both the principal and interest and place assets for collateral as reassurance for the lender. This is where debt-financing can be intertwined with equity-financing – putting up assets for collateral can include selling a stake in your company to your investors who plan to receive future profits. Business owners are involved with equity financing, means their investors are entitled to a portion of company profits. The investors may also have control in core business decisions. 


4. Angel Investors + Venture Capitalists  

Angel investors and venture capitalists are types of equity investors that support small businesses that have potential for growth but lack the adequate financial resources to grow and develop. Both these investors are often highly experienced and have expertise in investments within the industry your business exists. They will require pro forma with clear financials, demonstration of working product/service and a qualified management team, to consider investing in your small business. 

Throughout these financing options, small businesses are often still looking for ‘free money’ or grants they can collect to best develop their brand. If you are looking for support during your application process for grants + tax incentives or simply looking for what your small business is eligible for, contact a Grants Specialist at EVAMAX’s team today. You never know what funding you are bound to receive!

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