Should I Get A Bank Loan To Start My Business?

Every business starts with a great idea. Do you have one? Do you think it has what it takes to grow into a successful business? If the answer to both of these is yes, you are ready to start your small business. You are ready to become an entrepreneur in Canada. For many small business owners, one of the most challenging parts at the beginning is gaining enough money in order to actually start the business. Businesses take money to run and they need to be able to stay alive even if sales are low.

In the first year, and probably longer, of a business you need to expect that you won’t be making a substantial profit. All of the money you make will have to flow right back into the business in order to run operations and grow, reaching more clients and building more sales. This is just how business works. So how do you keep the business running, especially in the beginning with hardly any sales? The main thing is through funding. Funding can come from all types of sources across Canada.

There is funding available through the Government of Canada, and also through various private agencies that want to see your small business grow and flourish. For a list of over 1500 funding programs, check out our Funding Database tool. It has been made to narrow down your search and you may be eligible for them, in order to gain enough capital.

One of the biggest places people go to raise money for their business is the bank. It makes sense because banks have the most money out of anyone in the country. But is this a good place to get funding? Should you acquire a bank loan?

There are so many different variables in the air with this question, that it is hard to offer a concrete answer. However, bank loans are not all bad nor are they all good. Let’s start with all the good things. Bank loans are a great resource in order to officially start a business and get it off the ground. They help with operational costs at the beginning and can help you purchase things without any sales. Bank loans will be the ignition you need to start your business.

On the other side of things, bank loans will cost you more in the future as banks put interest on the loan. So the loan you initial got for $50,000 is going to cost you more than you were given (sometimes it can be even double). This is the downside of getting a bank loan.

At the end of the day, assess if you absolutely need a bank loan to start your business, because a lot of new businesses do and achieve great success. Even though you will have to pay more money back, your business will hopefully be making profit that enables you to do that! We wish you the very best in your funding search.