Meet with Potential Financing Sources
| Again, start early It’s a sad fact of life that no one will just give you money…except maybe your mom or dad! And that might just be a good place to start. But make sure they are serious and draw up a formal legal agreement to protect both sides. Many a potential entrepreneur has relied on “family financing” only to have their plans sadly derailed at the last minute when the promised cheque was not forthcoming! And just because it is your family, doesn't mean you don't have to pay the loan back with interest! |
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| Government help Check out the Canadian Small Business Financing Program run by Industry Canada  . Up to $500,000 can be borrowed for purchases of property, equipment and leasehold improvements. You apply for a loan directly through a lender such as a bank or other financial institution, for financing of up to 90 per cent of the cost. Interest rates are capped at prime plus three per cent annually, and there is also a one-time two per cent administration fee that may also be included in the financing. Lenders are required to take security in the assets financed and also have the option to take an additional unsecured personal guarantee, which cannot exceed 25 per cent of the total amount loaned. There are some typical bureaucratic snags such as a rule that the loan won't be advanced until the equipment has been purchased, but you should be able to sort this out between your bank and the equipment supplier. This will obviously be more difficult when you are paying for renovations. This is a great program that is relatively unknown among business persons. |
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