Business Financing Canada

Canada is no different from other countries of the world when it comes to business financing and this is the reason why a person finds so many financial institutions like banks, non banking finance companies etc that provide finance to the various business enterprises here. It is also to be noted here that as is in the other parts of the world, the small business sector contributes in a maximum way

to the total business sector. It is also the sector that provides maximum employment opportunities in Canada. Let us understand the various aspects of business finance in Canada.

Various Aspects of Business Finance in Canada

As said earlier also, the small business sector contributes in a great way towards the business in Canada and this is the reason, why most of the financing is done to this sector. If any person wishes to start up or expand his business in Canada, there are so many financial institutions from where he can easily get the required finance. Apart from loans, a small business person can also get the small business grants that are available in Canada. These grants are passed by the government through its various agencies for the development of a particular sector, especially the small business sector. But not anyone can get the grant. There are different criteria that a person should fulfill in order to get the grant. However, if a woman wishes to start up or expand her small business enterprise, she can easily get the required finance by way of loans that are provided by the various financial institutions here and also as grants that are provided by the Canadian government and women are of course given priority in that.

Thus, for a woman entrepreneur in Canada, it is very easy to get loans and grants. Apart from the loans and grants, there are also angel investors in Canada that invest their money in the various business enterprises that are set

up here. But getting the angel investors to invest in your business enterprises is not so easy. It has been noticed that the angel investors practically reject about 75% of the business proposals they get unseen. Thus, getting an angel investor in Canada is not that easy. It is up to you to persuade him / her to invest in your enterprise. Its really a very difficult task, but if you manage to turn an angel investor in your favor, it can be said that you have won half the battle. There are many web sites as well as articles that educates a person as to how he can turn the angel investor in his favor and a person should go through these if he really wishes to get the angel investor invest.

Various Sources of Business Finance in Canada

The first and the most important source from where a person can easily get the finance in Canada are the various banks and financial institutions that provide many types of credit facilities. The prominent among the various credit facilities is the term loans. As the name suggests, these types of loans are provided for the fixed period and the maximum period that a person gets to repay the loan in Canada is generally 20-25 years. It also attracts rate of interest, which is generally fixed and is comparatively lower than the other credit facilities being financed in Canada. Working capital advance is other type of credit facility that is available in Canada being provided by almost all the financial institutions.

It is provided for making temporary arrangements because of the time lag between the payments and the receivables of a business enterprise. This type of credit facility generally attracts higher rate of interest and is available by hypothecation of the inventory and the receivables of a small business enterprise. The business person is granted a limit in this type of credit facility and he is allowed to withdraw as well as deposit up to that limit. So, it can be said that for fulfilling the day-to-day needs of the business, there is working capital advance that is available and for the capital investments, there is term loans that are available in Canada.

There is also a SR&ED tax credit program for the business enterprises in Canada. This is basically a research and development program that is applicable to all types of businesses in Canada regardless of the size or the nature of the business. In this type of program, the business person is apprised of all the tax credit programs and how he can easily take benefit of the various tax structure laws. There are many misconceptions about this program that it is only for the high-tech businesses and corporations. But it is not so. Equity finance is another way of obtaining the credit facility for the business enterprise in Canada.

This is the source that is not required to be paid back like other credit facilities like loans etc. Also, a business enterprise has to fulfill all the norms before it is listed in any of the exchanges. The equity capital comprises shares etc. There are also many private lenders that are there in Canada for providing the financial assistance to the various business enterprises. The services of these lenders are basically availed by those business enterprises that are not able to get the finance from banks and other financial institutions. It is also to be noted here that the rate of interest being charged by such lenders is comparatively higher as they are quite aware of the necessity of a business enterprise. Apart from the above, a business enterprise can also go for obtaining the required finance from venture capitalists in Canada.

Summing up

It can be easily said that there are many sources from where a person can easily get the required finance in Canada. As in the other countries of the world, the small business sector forms an important part of the whole business sector in Canada and this is the reason why the government gives grants for the development of this sector.