Securing Financing For Small Businesses In Canada

The article is about Securing Financing For Small Businesses In Canada. A start-up small business can gain immensely from a good capital. Since small businesses’ capital requirements are lower, there are a lot of financing options available. From government agencies to private lenders, a small business owner in Canada has a good range of financing options to choose from. However, since there is little or no collateral, the rates for the financed sum will vary based on the duration, nature of business, and the lender.

Securing Financing For Small Businesses In Canada

The key to secure a good deal on your small business finance is to be prepared. Make a list of the documents that your lender may ask you for. These include:


A business plan

A detailed document that introduces, describes and summarizes the nature of work you plan to undertake. A sound business plan is the primary document that an investor or a lender will look for. In case your business plan does not cover all the angles, the interest rates may increase since the plan may be considered risky.

Projection of cash flow

This is another important document that forecasts the revenues that you plan from your product or service. Your forecasts should be based on concrete financial and relevant market data. The lender will use this document to assess the financial risk involved.

Past business tax returns

In case you have been in operation for a while and require financing for expanding your operations or offerings, the lender will need to see your past business tax returns. The document is an indication of how well your business can be expected to do.

Personal financial statement

As the owner of the small business, the credibility and strength of the business relies on you. A statement of your personal finances, i.e., a list of your assets and liabilities will help the lender to assess the business better.

Credit report

Lenders place a lot of importance to credit rating. The repayment history on your loans and other ‘liabilities’ will help the lender assess your financial discipline. A good credit history can guarantee a good rate of interest.

In case you do not have any or some of the above documents, it is worth the time to start creating them. Go through them with a qualified professional before approaching potential lenders.

Choose your lender based on their reputation and references from your friends or business associates. Needless to say, having a hassle-free time with your financer will be a blessing. The government of Canada has set up a ‘Small Business Financing Program’ that falls under the ‘Industry Canada’ banner. The program funds ‘for profit’ businesses that have annual revenues of five million dollars or less. The Industry Canada website can help you with a list of lending partners for the program.

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