Overview: Small businesses play not so small a role
in the economic as well as social growth of a region in particular and the
country as a whole, as they contribute both in form of finance as well as job
placements to aspirants. This holds good for Canada also. The federal and the
provincial governments therefore provide financial help thru various loans and
grants programs in order to encourage people who are enthusiastic about
starting a concern on their own. In fact, about 20 billion dollars are being
set aside by the Canadian government towards its financing programs for small
businesses. In addition, government grants are also available for eligible
persons for starting or expanding their businesses.
Types of government funding programs: Eligible
businesses may be provided amounts ranging from $1500 to $10 m, according to
the nature and size of the projects thru the programs mentioned below:
One-time
and renewable subsidies and grants: The funds approved under these
programs are to be used under certain terms mentioned and need not be paid
back. The government provides grants and subsidies realizing the fact that
certain areas are less developed economically than others and need to be
specially addressed. After selecting such areas, government approve
billions of dollars for helping eligible businesses across the nation. The
important thing to note is that once you are approved such a grant; it may
be easier for you to obtain more from the same authority as you have
proved your worthiness already. At present, there are 39 federal programs
along with 57 provincial ones to choose from which offer amounts ranging
from $1,500 - $5,000,000 as support.
Loans
without interest or a low interest: Funds received through these are to be
paid back within a preset period. Loans without interest are advantageous
for obvious reasons though they may be less flexible in terms of the
amount and the loan period. Currently loans ranging from $1,500 and $10m
are on offer under 83 federal programs and 82 provincial ones.
Tax
refunds or credits: Under these programs, an interval in the tax time is
allowed during which time the flow of your business funds can be
facilitated which can save you big amounts of money. About $3,500 to $2m
of funds are allocated for these programs thru 11 Federal and 23
provincial programs.Insurance
against business risks: With the support of government sponsored
insurance, you can take loan from banks free of worry. Insurance programs
without premiums or with low premiums are on offer through 7 federal
programs and 8 provincial programs, together providing $20,000 to $10m.Relocation
grants: For eligible businesses, government will provide funds necessary
for the relocation of your business. $5,000 to $500, 000 are provided this
way through 7 federal programs and 6 provincial programs.Guaranteed
government purchase: This helps the initial promotion of your product and
the speeding up of the establishment of the same in the market.Information
and services: Government offers training programs and other informative
programs which will help you in your management of your business and to
attain bigger profits. These are particularly helpful while starting a new
business.Repayable
contributions: These are funds for which returns are necessary only if
your business project is successful and makes monetary gains.Grants
for Property taxes: In order to encourage business investment in selected
areas, government offers a relief on the property taxes. In effect, you
receive finance as a grant since you otherwise wouldve needed to repay
it.
Equity
financing: Under this program, government invests in your business though
unlike normal investors, you wont be pressurized for returns.
Sources of Financing: This is an internet portal of
Industry Canada, where conventional and alternate sources of small business
funding programs in Canada could be searched for. Its objective is to promote
awareness to small and medium enterprises about the choices of funding
available for them to choose from a wide range of choices. The site will offer
vivid information about banks, caisses populaires and credit unions; leasing
and lending; angel investors, venture capitalists, and various supportive
programs of the provincial as well as federal governments.
Getting access to a loan: Chartered banks are the
commonest funding source for small businesses. Working capital for your
businesses can be had thru short and long term loans, mortgage loans etc.
Among other financial sources are the insurance
companies, credit unions capital and loan companies and trust companies.
Finance could also be arranged through leasing for which though, the rate of
interest will be relatively high. Leasing are generally used for equipments,
machinery, vehicles etc, where it is worthy to reduce the capital cost outlays.
To increase your chance of getting a loan: keeping
in mind the following points will help in your cause of getting the right loan
for your business.
You
should be able to convince your banker about your experience in the areas
concerned in the business you intend to start. This is because every banker
will look upon the ability of you in the overall management of your
business to make it a success and for that experience counts above all.You
should analyze and prioritize your borrowing needs in advance so that you
could save time later while negotiating on select terms with your banker
or lender.You
should be prepared to take calculated risks but should not gamble as the
banks will prefer to be on the safer side.Unless
you have an established line of credit, keep away from borrowing through
overdrafts.Update
yourself regularly of the lending practices that exist and set your
management of assets and earnings accordingly.
