Financing Your Business

As a business owner, you have many financing options to choose from, and many business owners find it hard to ask for money for their small business. Knowing how to talk to lenders and access funds for your company is key to business success. Developing a good relationship with one or more lenders ensures you have a financial partner there to assist you every step of the way.

Our team of experts are here to provide personalized support and direct you to the best options for your needs. Below are financing options and tips to get you started.

The 5 C’s of Lending:

You’ll need to understand how lenders evaluate you and your business. Most lenders use the 5 C’s of lending to make decisions:

You’ll need to show that your business can generate enough cash flow to repay a loan. If you’re a start up business, a solid business plan showing financial projections is necessary. If you already have a company history, your lender will review past financial statements to assess this.

Are you able or willing to invest your own money and time into your venture? At start up, your personal net worth and contribution show lenders that you’re serious.

The rate of interest charged, length of time to repay, and other requirements will be discussed. Be prepared for lenders to ask for annual or semi-annual reviews of your company performance once you receive the loan.

In some cases, lenders will use your assets or assets owned by your company such as company vehicles or equipment as collateral if the loan cannot be repaid.

Do you have the management skills and experience to operate a business? Your first impression counts for a lot. Dress professionally when meeting with your lender and arrive prepared.

Know How Much You Need

Be specific about what you’re asking for. How much money do you want and what will you use it for? Are you purchasing equipment? Updating technology? Hiring employees? Buying more inventory?

Your stage of business, amount of money you need, and purpose for the lending need to be clear. Understand anticipated costs and present an explanation for the lending request.

Equity Financing

Equity capital is the amount of money that you and your partners put into the business or raise from other investors. Equity is not debt. While investors share in the profits (and losses), their investment is not a loan. Make sure you consult your lawyer and accountant before you enter into any kind of equity agreement—it can have a major impact on the future of your business. The following are types of equity financing:

Personal Investment: From Yourself, Friends, or Relatives

Personal savings, securities, real estate, and other personal assets are your most obvious sources of cash, and friends and relatives can also provide additional funding. In most cases, the small business owner must assume the largest share of the risk by making the largest investment.

Banks and other lenders have rules about how much investment they require before they will lend money to your business. This is sometimes called the debt-to-equity ratio, and it varies depending on the type of business.

Partner Investment: Full Partners and Silent Partners

If you can’t supply all the equity capital you need, you can also find partners who are willing to invest money into your business. You’ll usually share ownership with your partners, including profits and liabilities. In most cases, your partners will also want a say in how the business is run.

If you don’t want to share decision-making authority, you can take on limited partners, sometimes called silent partners. They contribute financially to your business without participating in management or controlling the partnership. If you’re considering a partnership agreement, make sure you seek legal advice.

Shareholder Investment: Public Corporations and Private Corporations

If you’ve incorporated your business as either a private or public corporation, you can take on shareholders to finance your business. Shareholder investment is complex—make sure you seek qualified legal advice from an experienced lawyer and have a shareholder agreement in place.

When your business gets larger and more successful, a public share offering can be a great way to raise funds.

Employee Investment

You can also raise funds by asking your employees to invest in your business by making a partnership offer to your best employees or selling stock to your employees as a form of profit-sharing (if your business is incorporated).

Employees can be a great way to raise equity and can improve your employees’ working habits too—they’ll benefit from your shared success. The disadvantage is that it can be difficult to remove or replace employees that have invested in your business if they become unproductive or uncooperative.

Venture Capital

Venture capital firms provide equity financing for businesses, usually for high-risk enterprises with great potential. Most venture capitalists plan to liquidate all or part of their investment at a substantial profit within five to ten years—they are not lifetime investors.

Most venture capitalists will not want to become involved in your day-to-day operations, but they will often want representation on your board of directors.

Debt Financing

Debt financing is money you borrow for your business. It must be repaid with interest. Lenders like banks and credit unions do not share in your business profits (as investors do), but they must be repaid no matter what—even if you have no profits.

Different lenders have different requirements for awarding loans—make sure you understand them before you start.

To decide what type of debt financing is right for your business, remember these basic rules:

  • Finance day-to-day operations (working capital) with short-term operating loans
  • Finance long-term fixed assets with longer-term loans or mortgages

Potential lenders in Alberta include:

Business Term Loans: Longer-term loans for financing fixed assets.

Major purchases like land, buildings, and equipment are usually financed through a combination of equity capital and business term loans, sometimes called fixed-asset financing.

Business term loans can last anywhere from one to 15 years, depending on the useful life of the asset you’re purchasing. If you cannot repay the loan, the asset you’re purchasing will be repossessed by your lender.

The benefits of a business term loan are:

  • Your loan agreement is based on your ability to repay the loan out of your earnings—it’s less likely you’ll end up with a loan payment you can’t make
  • As long as you meet the terms of your loan agreement, there are no other payments to make
  • You can build a long-term working relationship with your lender

Learn more about financing options available through the Government of Canada’s Business Benefit Finder.

Alternative Financing

If your business doesn’t have a sales history, or you operate in a higher-risk environment, you may find it difficult to get conventional financing. But don’t worry—there are other options.

Personal Financing

Personal financing is also sometimes referred to as “Bootstrapping”. Investing your personal savings into your business will give you the freedom to operate it as you choose. It will also make your business more attractive to potential investors.

Contributions from Family and Friends

Sometimes referred to as “love money,” investments from family and friends have lots of advantages: they won’t impact your credit rating, there are no service fees, and usually come with no or very low interest rates. But be careful—they can be a potential source of conflict in your relationships.

Unsecured Lines of Credit

An unsecured line of credit will give you access to cash whenever you need it. It can help with resolving short-term cash flow problems, business expansion, or other expenses. You can usually negotiate the repayment terms and interest rates. A good credit history and a good relationship with your bank will play an important role in your negotiation.

Credit Cards

Use credit cards with caution—they usually have very high interest rates. Use them only for short-term cash flow, not long-term funding. Responsible use of credit cards can help you build a good credit history and provide short-term access to cash when you need it.

Crowdfunding Sites and Peer-to-Peer Lending

Also known as crowd-sourcing, crowdfunding can help you access loans via small amounts donated by a large number of people—anyone can be a potential lender. Before starting a crowd-funding campaign, be sure to read the fine print. Pay attention to how much the crowd-funding platform retains as fees.


Advance Payment

Asking for a deposit from your clients before beginning work can provide you with the capital to secure raw materials for a project before getting started. Some companies pair advance payment with crowdfunding to secure financing for their venture before beginning production.


Factoring means selling your accounts receivables (the money your customers owe you) to lenders. They buy your customers’ outstanding invoices as collateral for funding. Factoring is usually only an option for established businesses.

You have two options for factoring: borrowing against your accounts receivables, but keep responsibility for collecting, or sell responsibility for your accounts receivables.

Contests and Awards

Entrepreneurial or small business competitions are organized by nonprofit organizations, business corporations, or government bodies. They are usually business plan competitions but can also be specific to other aspects of your business, such as environmental stewardship or innovation.

Home Equity Line of Credit

A home equity line of credit (often called a HELOC) lets you borrow on the equity of your home (the current market value of your home, minus the outstanding mortgage balance), using your home as collateral.

There are two types of HELOCs: fixed rate loans and variable rate lines of credit.

If you are an individual and your total debts do not exceed $250,000, you may also want to consider a consumer proposal. This is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). The LIT will work with you to develop a plan for paying back your creditors. Learn more about consumer proposals from the OSB.

Bankruptcy for corporations:
If you own a corporation, you cannot be held personally liable for the debts of your business. But declaring bankruptcy isn’t a free pass—it will still affect your credit rating and make it harder to get a loan in the future.

Government Grants, Loans, and Financing

anadian federal, provincial, and municipal government bodies can help your business through grants, loans, or other forms of financing. Finding and applying for government grants or loans can be a time-consuming, complex process. Be aware that you may not find any government financing programs that are specific to your current business needs.

Search for government financing opportunities through the Government of Canada.

Find Financing Opportunities

Government Grants

There are many misconceptions about government grants for small businesses. The government isn’t necessarily giving away free money—they’ve created publicly-funded programs to help the Canadian economy. Some programs are available to businesses all over Canada, while others are restricted to certain business types or regions. Most funding programs have very strict requirements for use of funds and reporting requirements. Learn more in our Ultimate Guide to Business Grants blog.

The Canadian Government has a list of business grants and financing on their website. Make sure you do the research to confirm that your business is eligible before you apply.

Always do your research (and contact us!) when you come across websites advertising free grants—some of them are scams. You should not have to pay for grant money, lists of grants, nor the application package for a grant. Grant qualification criteria and application processes are public information that can be easily accessed by checking the grant web page or contacting the administrators of the grant.

Government Loans

Federal and provincial governments can lend money or provide cash advances.

Other Government Financing Options

The Canadian government can help your small business succeed in other ways, such as:

Specialized financing programs

There are specialized financing programs for certain demographics and communities in Alberta including women, youth, Indigenous and immigrant entrepreneurs, and rural business owners.

Financing Programs for Women

Some organizations provide specialized small business funding for women entrepreneurs.

Alberta Women Entrepreneurs (AWE) offers repayable loans to female-owned, Alberta-based businesses. Loans can be used to start or purchase your business, or to expand your existing business. Lending decisions are strongly tied to AWE’s assessment of your business plan for viability and economic impact.

AWE also provides advising, mentoring, training, and other support for women entrepreneurs.

Financing for Youth Business Owners

Youth entrepreneurs can get special financing rates to start their own businesses in Canada.

Futurpreneur Canada is a national non-profit organization dedicated to growing our nation’s economy one young entrepreneur at a time. They look at character, not collateral, when providing youth aged 18-39 with pre-launch coaching, business resources, startup financing and mentoring to help them launch and sustain successful businesses.

Financing for Indigenous Entrepreneurs

Provincial and federal funding programs are available for First Nation, Métis, and Inuit entrepreneurs who want to start their own business.



  • Alberta Indian Investment Corporation (AIIC): This loan is specific for First Nations in Alberta. The AIIC provides interest-bearing loans to Indigenous entrepreneurs to help establish, acquire, diversify, or expand a business.
  • Indian Business Corporation (IBC): This loan is specific for First Nations in Alberta. IBC provides development lending and financial services to First Nations’ businesses and individuals as well as a loan specific to women.
  • Community Futures of Treaty 7 (CFT7): This loan fund is specifically for First Nations members of Treaty 7 to establish or expand a business. CFT7 provides lending services, business support services, community economic development, and more for members of the Treaty Seven First Nations.
  • Settlement Investment Corporation (SIC): This loan is specific for members belonging to any one of the 8 Métis Settlements in Alberta. The SIC promotes economic development in Albertan Métis settlements by providing debt financing, business planning, mentoring, and management support services to Métis entrepreneurs.
  • First Nations BankThe First Nations Bank is dedicated to providing financial services and support for Indigenous business owners. They are a leader in the provision of financial services to Indigenous individuals and an advocate for the growth of the Indigenous economy and the economic well-being of the Indigenous community.
  • Business Development Bank of Canada (BDC): BDC offers a variety of business and financial services for Indigenous businesses, including the Indigenous Entrepreneur Loan and advisory services for financial management, sales and marketing, and strategic planning.
  • FuturpreneurFuturpreneur Canada supports Indigenous entrepreneurs aged 18-39, helping them launch or buy their own business. Receive up to $60,000 in financing, an expert mentor for up to two years, and access to resources.

Financing for Immigrant Entrepreneurs

  • BDC New Canadian Entrepreneur: This program is for new businesses that have been in operation for at least 12 months and generated revenues, immigrated to Canada less than five years ago, have a permanent resident status or protected person status and have a viable business plan
  • Futurpreneur Newcomer Loan: This program targets entrepreneurs between the ages of 18 to 39 who have permanent resident or citizenship status with no established or little credit history, who have been in business for less than 12 months

Financing for Rural Businesses

Some lenders focus on encouraging economic growth in rural Albertan communities, providing special financing opportunities for businesses in rural areas.

  • Community Futures Alberta: Community Futures provides loans of up to $150,000 for Albertans looking to start or grow their business, with a special focus on strengthening and diversifying rural economies.

For a full list of financing opportunities available for your business, use the Innovation Canada program search tool.

There are other financing options for your small business that we haven’t listed above. Entrepreneurs are creative, and there are countless ways that business owners finance their ventures! Don’t be afraid to think outside the box.


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