So You Have a Business Idea

So you got yourself a business idea and you’ve seen so many small businesses get funding and now it’s your turn.

But where do you go? How do these small businesses get funding?

Let us help you make things a bit easier by giving you the real answer.

GROW YOUR BUSINESS WITH GRANTS & LOANS

Learn about the funding available for your small business. It just takes a second!

Sure, if you Google How do small businesses get funding?, lots of things pop up!

10 ways to finance your business
35 ways to fund your small business
20 unique ways to get funds now
etc.

Sure, these things work if you have all the time in the world, but “going to the bank and asking for a loan” and “putting business expenses on a credit card” isn’t really a secret, and this shouldn’t be part of any list.

Assuming you are serious about wanting to start your own business, you need funding, so read on.

How Do Small Businesses Get Funding?

There is a trick.

No, not a secret way to secretly get funds that nobody knows about, but a real path toward success.

So what is the trick?

The trick is your business plan.

While only 30% of business owners write some sort of business plan (the other 70% do not), 100% of those who are successful at obtaining funding for their business had a business plan.

But it’s not just a business plan alone that will do the trick.

It’s very easy to pull together some information, slap it on a piece of paper, and call it a business plan.

A properly developed business plan takes time, effort, and of course, you have to know what funding agencies want to see.

In this article, we are going to focus on government funding programs as the primary source of how to get funding for your small business.

The reason for that is that while it may be known that government funding exists, many people don’t take advantage of it. Instead, the typical “I want to start my own business” person will end up going to a local bank to get a business loan, which is generally the first big reason why so many small businesses fail.

Government Funding Programs

There are hundreds of government funding programs, and many are exactly how small businesses get funding.

These government funding programs are a result of the Canadian government providing funds to support entrepreneurship and to build a more stable economy.

The funds available often come from various levels of the Canadian government: local, provincial, and federal.

As a small business owner looking at ways to get your business funded, all three levels of government should be considered to increase your chances.

The funds provided by the government also come in different forms, which include:

Grant programs
Government loans
Tax breaks and tax credits

Each government funding type has its own advantages and disadvantages, but all are ultimately created to help small businesses get funding.

Let’s take a deeper look at each of the funding program types and how to apply for them.

Government Grant Programs

Who wouldn’t love a grant for their business?

Government grants are programs offered by the Canadian government that are generally referred to as money you don’t have to pay back.

The pros of government grant programs are that they are, in most cases, non-repayable and are an excellent way for a startup to get financial help to launch on the right foot.

However, for small business owners looking to get funding, there are more cons when it comes to government grants.

#1. Government grants are very difficult to obtain (in comparison to other government funding programs).

#2. Government grants are provided for specific needs.

#3. In many cases, to get a government grant, you have to match the funds.

#4. A secret small business killer.

#1. Government grants are very difficult to obtain

When comparing government grant programs to government loans or tax breaks, grants are by far more difficult to obtain.

In most cases, even though a government grant is the most appealing, it’s often the worst way to go.

That’s not to say not to try, but if no grants are available, move on quickly to other options.

#2. Government grants are provided for specific needs

Government grants aren’t for everything. Most grants are provided for specific needs such as hiring staff, training programs, going green, energy initiatives, or medical research.

Sadly, most people starting a business need funds to start up, pay for equipment, tools, rent, website development, and marketing, which are often not covered by grants.

A good way to think about grant eligibility is to ask: “Will these funds help the economy in any way?” Buying a luxury vehicle as a business expense does not.

#3. Matching funds are often required

A government grant sounds amazing, but not when you have to match the funds to receive it.

While there may be a few programs that are free money, most require you to invest alongside the government.

If you are relying only on government grants, this can become a major problem.

#4. A secret small business killer

Relying only on government grants as your primary funding source without considering other options can lead to failure.

Using multiple avenues of government funding is your best bet for properly funding your small business.

Government Loan Programs

Government loan programs are another excellent way for small businesses to get funding.

In fact, government loans are the most commonly offered programs and are often much easier to obtain than grants.

While government loans and bank loans are very different, many people are scared off simply because they hear the word “loan.”

The Government of Canada offers many loan types, including low-interest loans, no-interest loans, conditionally repayable loans, and government-guaranteed loans.

To learn more about these programs, call one of our small business funding agents at 1-800-288-9691.

Tax Break and Tax Credit Programs

Tax breaks and tax credits are some of the most avoided government offerings, even though billions of dollars are provided each year.

The reason is simple: businesses need funding now, not later.

With tax credits, the funds come after you’ve already spent the money, similar to a tax refund.

If you can afford the initial investment, always take advantage of available tax breaks and tax credits.

How to Apply for Government Funding Programs

Now that you understand the different types of government funding programs, the next step is learning how to apply.

Applying is easy. It’s mostly forms.

But there is a big problem.

Where are these programs?
How do you apply?
What is needed?
You are on your own.

This is why many people become frustrated with the government.

Managing billions of dollars across countless programs and regions is not easy.

But let’s move on, because there is a solution.

Once you find the right program and start applying, most government agencies look for the following:

Eligibility based on criteria
Location coverage
Industry alignment
Coverage of your specific needs
A solid business plan

The last two points are the most critical.

Does the program cover your specific needs?

Funding exists, but it depends on how you search for it.

For example, a farmer in Alberta needs $25,000 for an irrigation system. Searching for irrigation funding shows nothing. Searching for agriculture funding reveals multiple programs.