It’s a challenge faced by just about every small business. They need financing, but most banks and other traditional lenders won’t lend money to start-up operations.
Fortunately, these businesses do have a few options.
The most common method of getting financing (especially for solopreneurs) is for someone to just get a loan personally and use it for the business. Banks are generally pretty happy to do this, assuming the borrower has a decent amount of collateral and a good credit score. They’re much more comfortable lending to an individual than a business.
Some businesses are beyond the scope of a founder borrowing against their own personal assets. These operations can turn to new online-only lenders who specialize in dealing with small businesses. These lenders use technology to help decide which companies are a good risk and which ones aren’t, making the approval process shorter while minimizing defaults. Lendified and Thinking Capital are two of the leaders in this space in Canada.
Canada also had a peer-to-peer lending platform for small business called Lending Loop, but the site was forced to stop using the money of regular investors as it discusses its business model with regulators. It still funds loans with its own money, however.
Finally, there’s Canada’s Business Development Bank. BDC has been around since 1944, and currently has nearly $19 billion lent out to more than 32,000 entrepreneurs across Canada. Many of Canada’s leading business leaders got their start from BDC capital, but BDC does often charge rates higher than well-qualified borrowers can get from other sources.
