Finding the funds to start a business is often a big concern for new entrepreneurs. With the right preparation, you can boost your chances of securing the funding you need. In this guide, we’ll walk you through the essential steps to prepare for funding applications and maximize your success.
For a thorough overview of funding types, check out our Financing Your Business guide, which covers everything from grants and loans to investor funding. Now, let’s dive into preparing to secure the funds you need to get rolling!
Understanding the Funding Landscape
There are many types of funding available, each with unique requirements and benefits. Here’s a snapshot of the options:
Grants
- Most grants don’t need to be repaid, making them highly sought after.
- They often come with strict criteria and reporting requirements.
- They are awarded by federal, provincial, and municipal governments, non-profit organizations and foundations for a specific purpose. You may find a grant to upgrade your facility for handicap accessibility or a downtown beautification program, however; there are no general small business operating grants, so determining your need will help in your grant search.
- Grants are competitive, so having a well-prepared application makes a big difference.
Loans
- Require repayment with interest.
- Offer flexibility in terms of how you can use the funds.
- Banks, credit unions, and government-backed institutions offer small business loans, each have their own interest rates and terms.
- Be sure to have a detailed repayment plan to demonstrate you can handle debt responsibly.
Equity Funding
- In exchange for capital investment, equity investors receive ownership shares in your company.
- Common for startups and businesses that need significant capital to expand but may not yet have the cash flow to repay loan payments.
- Giving up equity means sharing control and profits, so weigh this option carefully.
Other Options
- Crowdfunding, which can generate both capital and visibility for your business.
- Microloans designed for smaller financing needs.
- Some programs also offer wage subsidies and skill development funds, which can reduce labor costs as you grow your business.
Key Preparation Steps
1. Research and Choose the Right Funding Option
With so many options available, it’s important to choose funding that aligns with your business stage and goals. Research each type of funding and be sure to check eligibility criteria. This research will also help you tailor your application and increase your chances of success.
2. Prepare Your Business Plan
A solid business plan is the foundation of a successful funding application. It’s your opportunity to show funders what your business does, who your target market is, and how you plan to make money. If you don’t have a business plan yet, or need help creating one, sign up for our Business Launch Program to get started.
3. Get Your Finances in Order
Funders will want to know that your business is financially viable. Make sure you have organized financial records, a strong credit score, and a realistic cash flow projection. If cash flow is a challenge, consider using our Cashflow Canvas Program to develop solid projections and better manage your finances.
4. Gather Essential Documentation
Every funder will have specific requirements, but there are a few basics that most will ask for, including:
- Financial records (tax returns, bank statements)
- Business licenses and registrations
- Ownership agreements if applicable
Preparing these documents ahead of time will save you from last-minute stress when the deadline is looming.
5. Practice Your Pitch
Some funding applications may require an in-person meeting or interview. A strong pitch is your chance to show funders why your business is worth investing in. Practice explaining your business in clear, compelling terms, and be prepared to answer questions about how the funds will help you reach your goals.
Common Mistakes to Avoid
Even the most prepared applicants can stumble. Here are a few common mistakes to steer clear of:
- Incomplete applications – Double-check that you’ve included all required information and documents.
- Mismatched funding – Ensure the funding type aligns with your business goals and needs.
- Underestimating preparation time – Gathering documentation, writing a business plan, and polishing your pitch can take longer than expected, so start early.
Preparing for Follow-up Steps
Funding applications don’t always end at submission. Often, funders will request additional information, clarification, or even a revised application. Be prepared to respond quickly and professionally and remember that each step you complete is an opportunity to strengthen your case.
Funding and Support Resources
Here’s a list of valuable resources to help you explore funding options, grants, and subsidies tailored to your business’s needs.
Business Benefits Finder – A free tool from the federal government, the Business Benefits Finder provides access to over 1,600 programs. By answering a few questions about your business, you’ll get a personalized list of funding, support, and resources that match your needs, including grants, tax credits, and wage subsidies.
Alberta Government – Capital and Financing Supports for Entrepreneurs – The Alberta Government offers a range of financial supports specifically for Alberta-based entrepreneurs, covering both startup and expansion needs.
Alberta Economic Development Funding and Grants – This resource provides information on various grants, loans, and financial incentives available through Alberta’s economic development programs.
Support for Employers in Alberta – Alberta-based employers can access funding and grants designed to support workforce development, including hiring subsidies and job training assistance.
Alberta Women Entrepreneurs (AWE) Funding Guide – AWE has small business loans specifically designed to support female entrepreneurs in Alberta (business is 50.1% women-owned).
Business Development Bank of Canada – small business loans and resources. Most of the BDC loans are for established businesses but the support and resources are open to all entrepreneurs.
Apprenticeship & Tradespeople Grants – Access grants and financial support dedicated to tradespeople and apprentices, helping fund training and skill development in the skilled trades.
Student Work Placement Program – A federal program that helps post-secondary students gain paid work experience in fields related to their studies, supporting both students and employers in Canada.
Wage Subsidies and Assistance Programs – Government programs offering wage subsidies and hiring assistance to help businesses recruit skilled employees across Canada.
Canada Small Business Financing Program – Through this program, the government shares the risk with lenders to make it easier for small businesses to secure loans for business expansion, real estate, and other needs.
Community Futures Alberta – With 27 offices across Alberta, Community Futures provides financing and resources to support entrepreneurs in rural communities.
Ready to Take the Next Step?
Applying for funding is a big step, but with some careful preparation, you can set yourself up for success. If you’d like personalized guidance, book a consultation with a Business Link Advisor. Our experienced pros are here to help you navigate the process and find the best funding options for your business.
