Business Financing for Self-Employed Canadians
So you’re thinking about joining the other millions of self-employed Canadians, but you have one burning question: Where does the money come from? If you’re not one of the lucky few with a bottomless budget at your disposal, you’ll have to look into financing to access the cash flow your business needs to cover start-up and operating costs.
Borrowing Options
So what are your options when it comes to borrowing money for your business? Banks are much friendlier than they used to be. Canadian financial institutions, whether big or small, house a small business development centre that offers a variety of products and services to satisfy their clients’ needs.
Understanding Lender Expectations
Financial institutions are happy to lend money to well-paid individuals with clean credit reports and steady jobs. However, if you’ve launched your start-up and are experiencing some trouble with making your credit payments, don’t expect them to be as willing to loosen their purse strings. This is why it’s important to plan ahead.
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Planning Ahead
If you’re currently working at a good job and plan to launch a business within the next three years, it’s a good idea to apply for a line of credit now (while they still like you). Know your score before you go. Before you stroll into your financial institution asking for large sums of money, be sure to know where you stand as a potential borrower.
Checking Your Credit
Have you checked your credit records lately? If you haven’t, it is strongly recommended that you do so at least once every year to ensure that all contained information accurately reflects your credit history. Both TransUnion Canada (www.tuc.ca) and Equifax (www.equifax.com/EFX_Canada/) offer free credit reports by written request.
Alternative Financing Options
Think outside of the big banks box. If your attempts at getting financing from a Canadian financial institution fail, non-traditional sources of financing may be all around you. Ask around. Do you know someone who could act as a guarantor and co-sign on a loan with you? Perhaps you have property or stocks that could be used as collateral?
Think outside of the traditional financing sources if you aren’t able to get the funding you need through them.
Final Thoughts
Remember: where there is a will, there is a way.