Do you want to start your own business but don't have the money it takes to make money? Have you tried to get a small business loan from a bank or credit union and been turned down because you don't have enough collateral or sufficient credit history? You may be able to get the start up money you need from a Canadian Community Investment Fund.
Community Investment Funds are non-profit organizations dedicated to helping people who can't get the loans they need to get on their feet from a traditional lending institution (such as a bank or credit union), often because they don't have the credit history or collateral that a traditional lending institution demands. Some of these Community Loan Funds will also assist people with poor credit histories (although they will likely insist that you go through credit counselling).
So if you have no credit history or collateral because of divorce, because you're a new immigrant or because you're young, or if you have a poor credit rating because of repayment issues, your local Community Loan Fund may be willing to give you a small business loan.
Your business venture has to be local, though. Community Investment Funds get their working capital from their own communities. While a particular fund may have some government support, typically the bulk of the loan funds come from investments solicited from churches, service groups, and local businesses.
Different Community Loan Funds have different lending parameters so don't immediately write them off as a potential source of start up money or the money to expand your small business; if you're looking for a small business loan, particularly one to start a business, it's definitely worth checking with your local Community Loan Fund to see if you might qualify.
Examples of Canadian Community Loan Funds
- St John Community Loan Fund - provides small business loans of up to $5,000. You must show that you cannot get a loan elsewhere due to income, assets, security or credit history. "Loans can be used for almost anything as long as it is legal".
- CDBC First-Time Entrepreneur Loan (Atlantic Canada) - provides small business loans for first-time entrepreneurs starting or purchasing their very first business.
- Quebec City Community Loan Fund - provides small business loans of up to $20,000 to projects that make sense business-wise and are of social benefit. Projects that "promote alternative economic structures and act as a catalyst to structural change" are of particular interest.
- Montreal Community Loan Fund - provides small business loans to a maximum of $ 20,000 for the start-up, consolidation or expansion of individual or social economy businesses. "The place of business must be on the island of Montreal and cannot be a franchise nor be of sexual character."
- Ottawa Community Fund - provides short-term small business loans of up to $15,000 "to businesses and business people with worthwhile business concepts, practical work experience and/or training, and a solid business plan."
- Jubilee Fund (Winnipeg) - provides loan guarantees for projects and small businesses that are economically viable and relevant to the Fund's social goals. Browsing their 'Business Projects' page will give you a good idea of the sorts of businesses they're looking for.
- Business Investment Loan Fund (Northwest Manitoba) - provides small business loans of up to $75,000 for businesses located in or intending to locate in the Northwest region of Manitoba. The fund is "intended as a lender of last resort". Applicants need to be able to provide a minimum 10 percent equity.
- Lloydminster Region Community Futures (Alberta) - provides small business loans of up to $150,000 for starting or growing a business. Applicants have to show proof that they've been turned down for a loan by at least one financial institution. There is a loan application fee.
- Community Futures British Columbia - provides small business loans of up to $150,000 for new business start-ups, business expansion, or to stabilize an existing business. A "reasonable personal financial investment" is required.
- Circle of Habondia Lending Society (B.C.) - provides loans of up to $1000 to women "for whatever they need it for" in the Slocan Valley/Nelson/Castlegar area of B.C. Help with business ideas is one example of the kinds of expenses the Society will help out with.
Before You Apply
Every one of these Community Loan Funds wants to see a solid business plan as part of your application. If you don't have one, my Writing a Business Plan series that starts with the Business Plan Outline will guide you through the process of writing one.