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Small Business Loan Ontario



Small businesses have a big role to play in a nation's economy in general and the region where it operates in particular. For this very reason, governments take keen interest in promoting and supporting small business projects which is true with Ontario as well. For aspirants with a clear idea and enough working experience in the field are encouraged through various loan programs of the federal and provincial governments.

The sources of funding: There are various sources from which you may seek financial support for your business, though most of them will need you to be able to contribute a certain amount by yourselves. You should have enough capital for making purchase of the equipments and inventory, for over head costs like salaries and rents and also enough reserve amounts which could be handy in case if an emergency situation arises. It is always advisable that you should have an idea of the amount you need for beginning your project, considering the different areas and facets of your business, before you start looking for financial help.

The common lending sources that you may choose from are

  • Banks and similar institutions: Most people approach a chartered bank for a small business loan as many of the banks provide a lot of options of loan with different durations. Among other financial institutions, credit unions and financial trusts are the popular ones .

  • Personal lines of credits: if your concern is a home based one or a similarly small business, lines of credit and credit cards suit you better as they process the funds quicker than the conventional banks though the interest rate they charge will be much higher and have a limit for the amount they lend.

  • Business angels: Rich individuals who are interested to invest their money into small businesses are called angels and they generally finance for the initial stages of the project.

  • Venture capitalists: Venture capitalists play a significant role in the financing of small business projects . They are nothing but pools of private or public sponsored capital which assume participation in some capacity in the firm which applies for a loan.
  • Available loan programs in Ontario:

  • Canada Small Business Financing program (CBSF): CBSF which is developed based on the Canada Small Business Financing Act, offers help for accessing loans up to $250,000 for getting the fixed assets financed for needs like the purchase or betterment of immovable and real property, necessary equipments, or for improving leased property. The loans are made by approved lenders to profit oriented business other than farming, and they are not to be used for :
  • 1. Home improvement for non profitable purposes

    2. Investing in the share markets

    3. Providing finance for other projects

    4. Purchase of vehicles and other properties for personal good

  • Innovation Financing Solution: This program is developed in order to help projects financially to develop e-business, venture into export markets and to compensate for the R & D expenses connected with the entry of new products and services .

  • BDC (Business Development Bank of Canada) loans: BDC offers financial assistance for small and medium sized business enterprises (SMEs) particularly on the new and exporting sectors . The borrowers ore provided with flexible repayment options, and where personal guarantees are needed, the non commercial assets will not be taken as collateral.

  • Ontario Community Futures Development Corporations (OCFDCs): OCFDC, with the support of the federal government, helps new and running businesses to access finance through local investment funds for beginning or expansion of businesses which lead to creation of new jobs. Assistance worth up to $150,000 on commercial terms is provided as loans, guarantees or equity investments. The local board of directors is authorized to take all the decisions connected with financing Apart from financial assistance, CFDCs offer other services to businesses like providing advice, information and counseling, helping in the development of business plans, training etc .

  • Micro-credit lenders: They provide loans for individuals who wish to start a very small business or for getting self employed . These are provided through sources like non profit organizations, financial institutions, community development programs etc . normally a specific area or group is provided finance by a particular lender. The size of the loans generally is less than $5,000 and individuals who have failed to get a loan otherwise, are given preference. Many lenders also offer services such as providing business training, instructing etc.

  • Programs for youth:

  • Summer Company: This program in addition to offering business training and mentoring provides finance of up to $3,000 to young aspirants to start and run their summer businesses. To be eligible for this program, the candidate should be between 15 - 29 years old, should be either a resident of Ontario or a Canadian citizen or an immigrant, should not have a business or job elsewhere during the program, and should be a student.

  • Canadian Youth business Loan program (CYBF): Entrepreneurs between 18 and 34 years of age can apply for a CYBF loan and those whose business badly needs external financial help will be given special preference . The business should provide full time employment to you and those who work for you . In order to facilitate the growth of your business in the initial stages, loan repayments of 3-5 years are available
  • 7)Financial programs for the unemployed:

    Unemployed individuals who are eligible for Employment Insurance will be provided income and business support, during the initial stages of their businesses, by the Ontario self-employment Benefit.