In the midst of tighter bank restrictions and growing interest rates many small businesses in Canada are turning to new, alternative sources of funds. Here we look at various alternative borrowing options outside of credit card advances and traditional banks.
Angel investors are individuals looking to support small businesses from the ground up by providing funding and expert advice. With the investment, angels are looking for transparency and possibly a seat on the board. They tend to focus on industries in which they have expertise and on companies that show high growth potential.
Crowdfunding is the process of raising money for a project or business using an online platform to tap into a large number of people (aka a “crowd”). Investors typically don’t get repaid with interest but rather get rewarded through special perks or gifts.
A Grant is funding given by the government to a Canadian small business. It is a sum of money conditionally given to a business that doesn’t have to be repaid, but must legally be used under the terms of the grant. Grants can be difficult to receive as competition is strong, requirements are strict and funds are limited.
Peer-to-Peer Lending – or P2P – is a method of financing that enables individuals to borrow from lenders through online platforms without financial institutions acting as a go-between. This way of borrowing has grown to prominence in the last few years due to its ease and efficiency for both lenders and borrowers. While Canada has been slow to embrace P2P Lending, online lending platforms like Lendified are offering an alternative source of funding for Canadians.
Venture capitalists are looking for the next big thing: companies that have high potential for growth. Venture Capital is funding for your small business with strings attached. The venture capitalist earns through owning equity and some ownership in the companies it invests in and expects a large return on that investment when the company goes public.
There are many different funding and financing options for small businesses to explore. At Lendified, we offer a simplified, streamlined lending process that gives your business access to capital when you need it. The Lendified loan process uses innovation and technology to recognize your reputation, hard work and the potential of your small business to determine your creditworthiness.