How will I fund my business?

When you are looking into starting a business, one of the most important questions to ask yourself is how you will find funding for it. A well-planned funding structure is crucial to the success and growth of your business. Whether you are looking to start a small local business or create a corporation, here are five different ways you can find funding to kickstart your new business venture.

Table of contents

1. Personal Investment

2. Crowdfunding

3. Government Benefits and Grants

4. Borrowing

5. Private Money

Personal Investment

This is commonly the first source of funding for your business. If you decide to use your own money, you will avoid outside influences. You will be able to maintain more control of where your funding goes and keep your profits where you need them most.

Crowdfunding

This method involves raising small amounts of money from a number of individuals. There are a few different types of crowdfunding:

• Equity Crowdfunding. In exchange for their contributions, investors receive shares in the company.
• Debt Crowdfunding. Investors will lend their money to a business with a high interest rate. The purpose of this is to reduce the risk of their investment.
• Reward Crowdfunding. Individuals will donate to a business with the expectation of receiving a non-financial reward in return. This can be products or services given at a later date.

Government Benefits and Grants

The Government of Canada offers a variety of benefits and grants to help fund your business. These grants can assist you in paying for research and development, marketing, salaries, equipment, and more. Visit this Business Benefits Finder to see what funding your business qualifies for.

Borrowing

There are a few different types of borrowing methods 1st Choice Savings offers. Loans, lines of credit, commercial leasing and commercial mortgages are ways you can fund your business.

1. Loans will offer your business the opportunity to expand, cover expansions or purchase new equipment. 1st Choice offers a variety of rates and terms, so your business has the flexibility to grow.
2. Lines of credit will offer the same opportunities as a loan, but they provide you more flexibility with what you borrow. You can use your initial line of credit and use it again once your business requires further funding as it grows and expands. These are typically used to cover daily expenses.
3. Commercial leasing is a flexible alternative that allows you to update business equipment without investing the full purchase price. Leasing lets you get newer equipment faster, improve leverage, and optimize your tax savings.
4. Commercial mortgages allow you to invest in an incoming-producing property. We tailor a commercial mortgage to your unique business needs.

Private Money

This is a term used to describe money that is given to you by family and friends to start or fund your business. Sometimes this form of funding is the only type an entrepreneur may be eligible for. This option provides flexibility when funding your new business.

There are many ways your business can receive funding. Every business is different and paired with its own distinct set of goals. If you are unsure of which method works the best for you, we recommend booking an appointment with a business advisor to determine the right plan of action.