Most Realistic Ways to Fund your Small Business

Borrowing money to start your business is never easy, but having a source of money is always helpful.

In Canada, small businesses have been a major player in keeping the economy strong. In fact, nearly half of the jobs created today are due to small business owners’ success. To continue the success of small businesses in Canada, and to continue with the hiring which grows the nations employment rate capital is needed – but these days capital to fund a business is not very easy to come by.

Capital, or funding to start your small business is not very easy to get these days. The truth is a lot of small businesses fail right of the bat, but what people don’t realize is that they end up failing mostly because of money, and not having enough of it to launch the business properly. So how is one supposed to launch, or grow a business when nobody wants to help you fund it? Funding all depends on you, your business model, the financial projects and how you position yourself as the company’s spokesperson or sales person to investors.

Whatever it is that you need to do to get funding for your small business remember to be flexible, stay positive and be vigilant in your efforts to do so. Here are just a few of the most realistic ways to fund your small business:

Fund the business on your own: Most entrepreneurs always go into business with little to no money, and this becomes the biggest problem. How can you make money, or get money from investors when you don’t have any money of your own invested? To an investor, somebody who doesn’t want to put up their personal savings into a business shows them that they don’t believe in their own business, and are afraid of failure. Investing in your business shouldn’t be scary, but it should be motivational. Even if you have no money in your savings account to put towards a business, consider doing a start-up cost analysis and figure out exactly how much money you would need. A lot of times businesses start up for less than $5,000. Can you afford that? If not, maybe business isn’t for you, at this point. Consider leveraging some of your assets, in-order to make some money to be able to launch your idea.

Access funds from friends and family: Obtaining funding from your friends or family members is one of the easiest and most realistic ways to start up your business. Nobody else shares your vision of your business model like your brother, sister or best friend would. However at the same time, when borrowing money from friends and family keep in mind that you may be risking personal relationships with them by taking money from them – especially if their investment is lost and your business fails. If this is the only way for you to obtain funding, I recommend doing it a bit at a time and treat it as a high interest loan. Borrow only what you need, and pay back as soon as you can before borrowing more.

Small business loans from banks: You are probably thinking that since you don’t have any business credit history, or your personal credit history isn’t the best this can’t be the way to go. Well you are right to some degree. Many banks won’t give out business loans to anybody who has bad credit, or no credit, but isn’t it worth a try? Go to your local bank with a business plan on hand and present them your case, show-off your financials and projections and ask for a minimal bank loan. If you are asking for a ridiculous amount, obviously the banks won’t go for it, but even with bad credit the bank may give you a thousand or two which you can use to start up your business – pay it back, and borrow more – building your credit. At the same time, you can use your personal credit cards as a lender – just ensure you pay back the balance as soon as you can.

Seek government assistance:  Most business owners don’t consider the government to be of any assistance when it comes to financing – but what most entrepreneurs don’t realize is that the Canadian government has hundreds of government assistance programs which help small business owners though funding in the form of grants, loans and other financial contributions. The chances that your business will get funding is a lot lower than obtaining a bank loan, but there is no cost to apply and if you are successful you can obtain a government grant which does not need to be paid back. Consider researching individual government agencies, and the government of Canada website to learn more about this type of funding.

Combination of all: If you are seeking a larger amount, you must know that not all methods may work for you. For example, your family and friends may not have the funds to lend you $50,000 to start your venture. However, they may have $5k. This is a great start, and a good way to get more from the banks when you have $5,000 of your requirement already. Use a combination of family, friends, your own money (personal savings, credit cards..etc), and bank loans, and proceed to government funding. Piece by piece you may reach your goal or get close to it if all else fails.

Regardless of which option for funding you are to select, remember that your business doesn’t need to borrow from just one source – but it can use multiple sources to build up your business. Don’t ask for too much, and not use it – instead borrow what you need and cover your expenses and day to day operations.