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8 Sources of Business Start Up Money

Part 1: Where to Find Business Start Up Money For Your New Business


So you've got a killer business idea and want to start a business. How are you going to get the business start up money you need to take your new business from idea to success? This rundown of where to look for the start up money you need and the most popular sources of business start up money will help.

1) Your own pockets.

This may be daunting at first glance, but it’s the most popular source of business start up money. Don’t have a start up money nest egg? Many people get the business start up money they need by mortgaging or remortgaging their homes, or selling property or possessions – even those who do succeed in getting a start up business loan. Lending institutions and investors usually expect the person starting a business to make a personal financial commitment.

2) Family and friends.

The second most popular source of business start up money. Family and friends are often willing to provide a business start up loan or sometimes even an outright gift. After all, they’re likely to be already “pre-sold” on the value of your business idea to some degree, as your family and friends believe in you.

3) A line of credit.

While not recommended as a sole source of business start up money, a line of credit is essential for the start up phase. No matter how careful and detailed you’ve been in preparing your business plan, there are always unexpected expenses and expenses that you’ve underestimated.

Before you start a business, you should already have prepared the way to access this source of business start up money by having established a relationship with your local bank manager and by ensuring that your credit rating is in good shape.

4) A start up business loan from a bank.

I’m using the term “bank” to refer to a business start up loan from a traditional lending institution (such as banks and Credit Unions). It’s actually easier than ever to get a business loan, as more people than ever have been successfully starting small businesses and the big banks have more interest in small businesses than they used to.

That said, you can't just walk in, tell a loans manager how much business start up money you want, and expect to walk out with it. Applying for any business loan is a process that you need to prepare for. See How to Get a Small Business Loan to learn how to make a winning loan presentation and get the business start up money you need.

Don’t overlook the BDC (Business Development Bank of Canada). Supporting business is their business and the BDC has several programs that directly address start up business loans, such as their CoVision program, which provides customized term financing up to $100,000 for new businesses demonstrating long-term viability.

5) A start up business loan from a business-related or government sponsored organization.

There are many organizations whose purpose is to promote economic development or provide assistance to help particular types of people succeed in business. Often (but not always) this assistance includes financial support, such as start up business loans. For instance, one of the ways the Canadian Youth Business Foundation, a non-profit organization, supports young entrepreneurs (aged 18 to 34) is by providing start up business loans of up to $15,000.

Many women’s organizations also provide financial assistance to women in business, including start up business loans. Alberta Women Entrepreneurs (AWE) is one such organization; you’ll find links to women’s organizations throughout Canada in my Women in Business library.

There are economic development organizations in place in every province and territory to provide support and services to entrepreneurs, including financial assistance. For example, in Ontario, Community Futures Development Corporations (CFDCs) operate in selected communities in rural and Northern Ontario, while Community Business Development Corporations (CBDCs) serve rural Atlantic Canada.

And the Canada Small Business Financing Program (CSBF) provides term loans of up to $500,000 to help finance fixed asset needs through business loans made directly by a qualified lender (such as a chartered bank, caisses populaire, or credit union).

You’ll find more examples of organizations that offer business loans, including start up business loans, in the Small Business Loans library.

Continue on to the next page to read about three more potential sources of business start up money.

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