When entrepreneurs are looking for funding, there are various forms of assistance, which are often available to them in the form of grants, and other types of funding for startups. Knowing what they are and finding them is sometimes a challenge in itself. Our guide to the various means of financing for your SME startup or to help you pursue your activities in different contexts will help you see more clearly: which sources of financing apply to your situation?

Whether it is through loans, grants and subsidies or tax credits, several resources could be available to you to give a financial boost or coaching services if your startup is planning to carry out innovative projects and has a strong growth potential.

 

Government Grants and Scholarships

There are many grant and donation programs through which governments, who are committed to economic development, help young businesses. Both levels of government have put in place financial resources over time to support start-ups and provide the resources they need to take off. Among other things, assistance can be provided in the form of salary subsidies.

Depending on your sector of activity and the innovative aspect of your projects, one or more of these programs could apply to you.

You can obtain details on many Canadian government grants, contributions and other financial support programs on the Canada Business Network website. You can also use a handy questionnaire to help you narrow down your search for grant programs that are relevant to your project.

 

Other Organizations Offering Financial Support to Businesses

Beyond government institutions, many other organizations offer support in many forms to help start, maintain or accelerate the growth of your business. By visiting their financial aid directory, you will be just a few clicks away from information on the programs you could benefit from.

 

How to Qualify for Government Grants?

It may be difficult to get a grant. Many companies are competing for limited funds. The competition is fierce and criteria are strict. In order to maximize your chances of obtaining funding, here are some tips :

Required information

Typically, your grant application should consider the following:

  • Describe your business or project in detail
  • List and explain the benefits of your project
  • Include a task plan, including a breakdown of costs
  • Include a professional profile of the company’s key executives, mentioning their relevant experience and achievements
  • Of course, all the required forms described in the grant application

Rejection

Here are examples of reasons why a grant might be denied:

  • Geographical eligibility of the company
  • Lack of relevance of the requested project
  • Many grant programs require a certain percentage of the applicant’s investment. The applicant must be able to provide this amount
  • The justification in the application is not convincing
  • Lack of precision in the planning of the project’s implementation steps

 

Tax Credits for Businesses

If they are not as direct aids as subsidies, another way in which governmental institutions help companies, start-ups and others, is to have at their disposal tax credits through which companies can save part of their income taxes.

 

Venture Capital Financing

Certain types of innovative companies, particularly those in high technology, communications, biotechnology or IT (information technology), may be of interest to venture capitalists.

This type of investment often implies a shared ownership in the financed company: part of the ownership must be transferred to the investor and most of the time they reserve the possibility to contribute to the decisions and orientations of the company.

To qualify for venture capital, the potential return must be more appealing than the average investment since the risk is higher. This type of investor also prefers projects requiring amounts of more than one million dollars.

The Investissement-Québec website lists potential resources for finding venture capitalists.

 

Sociofinancing

A fairly recent type of financing, socio-financing, or participatory financing, is a method that involves engaging the general public – whether they are future customers or not, depending on the type of project – enough to raise money to start a business or project.

Often used for charities, socio-financing is increasingly used for private business projects or the development of new products within existing companies.

 

Donations and/or pre-sales

A crowdfunding initiative can be structured as an “advance purchase”, whereby an interested customer injects the amount of his or her purchase before the product is even available. By doing so, they signal their interest in the product.

In addition to being a good way to raise money for the start-up and advancement of a project, socio-financing can be a good way to demonstrate the interest of the project to a potential clientele, an interest that can be used to convince more major investors.

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