11 Proven Ways to Fund Your Small Business in Canada

Are you ready to seek funding for your small business but not sure where to start? This article will give you a high-level sense of the various types of funding and financing options available in Canada and the steps you need to take to secure them.

There are so many options out there, and while that’s great, it can be a little overwhelming. Several variables will impact which funding options are best for you.

The first thing you’ll need to confirm is how much funding you need. If you haven’t done that yet, use the Business Viability Kit to get started. This will help determine how many funding sources you’ll need and which ones best align with your goals.

Each funding option involves time investments, including research, application writing, administration time, and meetings. So it’s important to focus on pursuing funding opportunities that align with your values and have the highest chance of success.

1. Personal Investment (“Bootstrapping”)

Bootstrapping involves using your own savings or personal loans to start building your business as frugally as possible, investing more as you make more. Some famously bootstrapped companies include Patagonia and Mailchimp.

While bootstrapping gives you flexibility and control, it requires careful planning and budgeting. Map out your financial plan, and determine how much of your personal assets you’re willing to invest.

Even if you bootstrap your business to a degree, it’s worth exploring external funding options so you don’t miss potential opportunities.

2. Patient Capital or “Love Money”

Patient capital, or “love money,” involves borrowing from family or friends. These loans are often more flexible and can come with little or no interest.

Before accepting this type of funding, clearly define expectations, repayment terms, and involvement in the business. Make sure to formalize the agreement with a legally binding contract to avoid straining personal relationships.

3. Venture Capital (VC) Investors

Venture capitalists invest in high-growth startups in exchange for equity. This funding is best suited for businesses in tech or industries primed for rapid scaling.

Securing VC funding requires a compelling pitch and strong growth potential. Start by researching Canadian venture capital firms like BDC Capital or connecting with Creative Destruction Lab.

4. Angel Investors

Angel investors are high-net-worth individuals who provide funding for startups in exchange for equity. They often partner with early-stage companies.

In Canada, many angel investors collaborate through the National Angel Capital Organization (NACO). Building relationships and mastering your pitch are essential for attracting angel investors.

5. Crowdfunding

Crowdfunding platforms like Kickstarter, Indiegogo, and FundRazr let you raise small amounts of money from a large group of people.

For equity crowdfunding, Canadian platforms like FrontFundr and Equivesto are tailored to entrepreneurs seeking investors.

6. Business Incubators and Accelerators

Programs like Invest Ottawa, NEXT Canada, and Pacific Technology Venture offer mentorship, networking, and funding opportunities for startups.

Accelerators and incubators are especially helpful for startups in tech or innovation-focused industries. They connect you with investors and provide the resources needed to grow your business.

7. Government Grants and Subsidies

The Canadian federal and provincial governments offer numerous grants and subsidies. Use Innovation Canada’s Business Benefits Finder (https://innovation.canada.ca) to discover grants tailored to your business.

For Ontario-specific grants, explore Ontario’s Small Business Enterprise Centres (SBECs). Programs like the Black Entrepreneurship Program and the Women Entrepreneurship Fund supports underrepresented entrepreneurs.

8. Small Business Enterprise Centres (SBECs)

SBECs provide workshops, mentorship, and grant guidance. Ontario alone has over 50 SBECs, such as those in Toronto or Ottawa. They can also help connect you with funding opportunities tailored to your region.

9. Pitch Competitions

Pitch competitions allow entrepreneurs to present their business ideas in front of investors. Programs like Startup Global and local events offer platforms to secure funding while networking with industry leaders.

Your pitch should be concise and backed by solid financial data. Think of it as your “Dragon’s Den” moment.

10. Microloans

Microloan programs like Futurpreneur Canada and local economic development agencies provide small loans to entrepreneurs.

These loans are often easier to qualify for than traditional bank loans, making them a good option for early-stage businesses.

11. Revenue-Based Financing

Platforms like Clearco offer revenue-based financing for Canadian e-commerce and SaaS companies. With this option, businesses repay loans as a percentage of revenue, making it a flexible alternative to traditional financing.

Finding the Right Fit

Now that you have a high-level understanding of funding options, think about which one aligns best with your business goals. Are you comfortable with equity-sharing models like VC funding? Do grants or bootstrapping better suit your needs?

If you’re ready to explore specific opportunities or need support creating a competitive application, reach out to programs like Futurpreneur Canada or your local SBEC for guidance.

Have questions about funding your business? Let us know on our contact page (your contact page URL here).