Spring is in full effect and with all the beauty blooming around us, budding innovative ideas are no exception to that. Our team welcomes inspiring entrepreneurs all across Alberta to share their business ideas with us so we can help guide them to success. A question we frequently get from our promising business owners: where do I get the money to turn my business dream into a reality or to further grow my business? Get your pen and paper ready—today we’re sharing some general financing options for your small business!

Your Business Plan Is Key!

First things first—it’s important to know that a business plan goes with funding like peanut butter and jelly. It’s required almost universally by lending institutions. Awesome business plans detail things like your operational plan, market research, marketing plan, financials, SWOT analysis, etc. It may seem like a lot, but don’t become overwhelmed—we’re here to help! Many organizations, including lending institutions, can also provide business plan development assistance. Focus on conducting in-depth research and not so much on convincing prospective lenders why you’re passionate about your idea—you have to prove your idea is viable first!

What Are My Financing Options Anyway?

Now of course it would be ideal if you had the financial capacity to use your own money for the business as this keeps you debt-free, but it’s a reality that not many of us have found the money tree. So until then, obtaining capital from a lending institution or by other means may be necessary. A personal/business loan or line of credit from the bank may be a more practical venture. Some other traditional options (besides a bank loan) are:

  • Credit card
  • Personal loan/equity from friends/family
  • Leasing
  • Commercial mortgage

If you are applying for financing, remember that your lenders want a guarantee that they will see their money again. This is why preparation is key—it compels you to consider all angles and to devise a clear work plan for yourself. This will significantly increase your chances of approval from these institutions.

Traditional Lending

We always encourage our clients to know the 5Cs of traditional and alternative lending like the back of their hands. These are: Credit, Capacity, Collateral, Capital, and Character.

  • Credit: It’s critical for you to have and maintain an excellent credit score as this represents your repayment history ranking.
  • Capacity: Prospective lenders look at debt service ratios and payment history to predict your ability to repay loans.
  • Collateral: Think about this as secured equity provided to the lender.
  • Capital: Lenders want to see that you have made personal contributions/investments in the business.
  • Character: Lenders want to know you are someone they can trust, so integrity and honesty are valuable traits to have.

The 5Cs aim to help you understand what exactly a lender is looking for so you have a better chance of gaining funding approval.

Alternative Lending

If you’re willing to go beyond the traditional approach, we invite you to explore more creative financing solutions like Alberta Women Entrepreneurs (AWE), FuturpreneurIndustrial Research Assistance Program (IRAP), and Community Futures, to name a few. These institutions are dedicated to supporting small business and, aside from lending programs, they all have business development support for other aspects of the startup process, such as business planning, market research services, and entrepreneur mentorship.

Grant Programs for Small Business Owners

Finally, there are several grant programs available to small business that you can take advantage of, but it’s crucial that you read and understand the criteria required for each program as they are generally specific by industry or business activities. Some of those are:

  • Canada-Alberta Job Grant: This is an employer-driven employee training program which allows employers to decide what training is needed and broaden the skills of their employees.
  • Growing Forward Business Opportunity Program: This program is targeted to the agricultural industry and is devoted to helping improve farm processes, conduct feasibility analyses, and can even cover consulting fees for your business.

No matter which route you decide to go when seeking funding for your business, knowledge, preparedness, and commitment are essential ingredients for business success. If you find you don’t meet the lending criteria of these organizations, don’t be afraid to take a step or two back, if necessary, to take measures to improve your chances for approval. We have experts that know too well the struggles of finding the money you need to get your business idea off the ground. Give us a call at 1-800-272-9675 and we’ll help guide you! We’ve also got a wealth of financing information right on our website!