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The Best Sources of Small Business Funding in Ontario

Whether you are just starting or have been operating your business for a while, there are many small business funding options in Ontario can help propel your business to new heights of growth and profitability.  

From online lenders and traditional banks to government loans and grants, small business owners have a variety of alternatives to choose from. Understanding the different types of financing opportunities is crucial to getting the best funding for your needs. 

Financing your small business with the right mix of capital

Funding small businesses and startups requires the right combination of debt and equity financing to ensure short and long-term sustainability and growth. 

  • Equity capital: refers to funds paid for a business by investors in exchange for a portion of ownership or shares in the company. It is the most stable and long-term financial resource available to businesses because of the lack of interest payable on an ongoing basis. 
  • Debt financing: for small businesses, debt financing can be a useful financial tool to maintain company cash flow (working capital), support business expansion, or supplement capital investment from personal savings and equity. 

 As a principle, too much debt can be unhealthy. That’s why considering the different types of lenders, funding programs, and business grants is crucial in creating and maintaining an optimal mix of capital for your business. 

With the right mix of capital, businesses can support their various operations, including hiring and training employees, paying manufacturers, buying equipment, and maintaining the entire working capital cycle.

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Five small business loans and financing options in Ontario

There are many financing options to consider in supporting businesses in Ontario. Here are some of them: 

Personal savings 

In an ideal world, small business owners have the necessary funding to support their business activities or expansion and have cash or financing available to support their other personal needs. While using your personal savings to fund your business is faster, it is unwise to use all your personal savings to fund your buiness. Maintaining your quality of life, funding your children’s education, and preparing for retirement are also critical goals. 

Financing from friends or family 

Financing from friends or family can come as an equity investment, either through a business loan or some form of ownership in the company. However, it is essential to consider the potential friction this could cause for your relationships when the business doesn’t do well or friends or family want their opinions about business decisions considered.

Traditional bank loans 

One of the most common funding programs available for small and large businesses is traditional bank loans. This type of financing provides a lump sum of money and is repaid over an agreed period. The loan comes with a fixed or variable interest rate and a specific repayment schedule, depending on the terms. 

Banks also offer a line of credit, a predetermined amount of funds that business owners can borrow and repay multiple times. This can benefit business owners experiencing fluctuations in cash flow or covering short-term expenses. 

However, most banks will have stringent requirements that can exclude most small businesses. This is where alternative lenders like Alpine Credits come in. 

Alternative lenders’ loans 

Business owners often turn to alternative lenders because they grant loans through a more straightforward application process, faster approval time and less stringent qualification criteria. 

Alpine Credits offers flexible home equity loans that can be used to fund various business needs. In this case, the value of your home equity is the primary consideration for approval. Home equity is the difference between the value of your home and any outstanding amount owed on your mortgage.

Grants

In contrast to loans, grants do not need to be repaid. Entrepreneurs can access grants depending on their funding needs: hiring and training, research and development, business expansion projects, and capital and technology adoption. The catch is that each grant has specific requirements to qualify and has a funding cap per funding activity. 

The federal government and non-profit organizations across Ontario offer various funding options, which you can find more here. 

Some other financing options include: 

  • Canada Digital Adoption Program (CDAP): In partnership with the Ontario Chamber of Commerce, the Government of Canada grants small business owners up to $2,400 in reimbursement for getting their business online, giving their e-commerce presence a boost, or digitalizing business operations. 
  • Canadian International Innovation Program (CIIP): For businesses engaged in industrial projects in Brazil, China, Israel, India and South Korea, the Government of Canada offers up to $600,000 in funding to pursue collaborative research and development within these markets. 
  • Green Industrial Facilities and Manufacturing Program: Natural Resources Canada provides matching funds up to 100% of eligible implementation costs to a maximum of $20 million per proposal for businesses that implement energy efficiency and energy management solutions.  
  • Tax credits: While not necessarily a type of funding, reducing costs for your business can be an excellent way to manage your business resources. The Ontario government can provide tax credits for businesses seen as advantageous to the community, such as hiring students, engaging in scientific research and development, and creating licensed child spaces for your employees’ children. 
  • Wage subsidies: Wage subsidies are another way to decrease business costs. Business owners can be incentivized by diversifying their hiring practices, such as employing Indigenous youth and hiring Ontario tech graduates. 

 While grants can be a no-brainer for businesses, they have limitations. First, they often have high requirements and might only be available to businesses in certain industries. Also, capital assets like equipment, vehicles, and land, including operational costs such as rent or software development, are rarely covered by grants. These limitations do not apply to loans.

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Conclusion: flexible loans for small businesses with Alpine Credits 

Access to more funds plays a vital role in elevating your small business. With Alpine Credits’ home equity financing, entrepreneurs in Ontario looking to start a small business or existing business owners eyeing business expansion can secure the funding they need. 

Unlike big banks, your age, income, and credit history aren’t important. If you have equity in your home, we can get you approved. 

Apply now

Frequently asked questions

To get financing for a small business in Ontario, you can consider using personal savings, financial support from friends and family, bank loans, alternative lenders and grants. 

Business loans vary in terms of agreement and amount provided, with an average range of $5,000 to $500,000.