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Financing Info-Guide

Last Verified: 2006-06-22

This Financing Info-Guide focuses on organizations (government and non-government) in Newfoundland and Labrador that offer financing for business.  The Recommended Reading section provides links to tools and publications to help entrepreneurs understand the basics of financial planning.

The Canada/Newfoundland and Labrador Business Service Centre is your BEST source for FREE business information! Contact us for information on our Network Sites nearest you, or for information on any of our services.

Canada/Newfoundland and Labrador Business Service Centre
90 O'Leary Avenue
P.O. Box 8687
St. John's, Newfoundland & Labrador  A1B 3T1
Telephone: (709) 772-6022
Fax: (709) 772-6090
Toll-free (information): 1-800-668-1010 (in the Atlantic region only)
TTY Toll-free (hearing impaired): 1-800-457-8466
E-mail: info@cbsc.ic.gc.ca
Web site: http://www.cbsc.org/nl
Hours of operation: 8:30 am to 5:00 pm Monday to Friday

 

TABLE OF CONTENTS

Introduction
Financing Programs
   - Federal government departments/agencies
   - Provincial government departments/agencies
   - Municipal government
   - Other organizations (e.g. CBDC; NLOWE; etc.)
Recommended Reading
   - Online Small Business Workshop (OBSW)
   - Lending - The Basic Criteria
   - Dealing With Your Banker & Other Lenders
   - Getting Started in Small Business
   - Interactive Business Planner (IBP)
   - Databases


Introduction

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Survey on Financing of SMEs
This triennial survey, launched in 2001 by Statistics Canada's, identifies crucial sources of financing for Canadian businesses.  According to the 2004 survey:

...an entrepreneur's personal savings are twice as important as commercial bank loans in financing the start-up of new businesses...however, once a business is in operation, commercial bank loans become the single most important source of finance.

...just over one-half (54%) of entrepreneurs reported that, in 2000, personal savings were very important in launching their business, whereas 27% cited commercial loans from banks, credit unions, caisses populaires or other financial institutions as very important. About 23% of entrepreneurs said they also depended on their personal credit cards.

...other major sources of finance were personal lines of credit and personal loans, trade credit from suppliers, loans from friends and relatives, leasing and government lending agencies.

Industry Canada
 Canada Small Business Financing (CSBF) Program

The Canada Small Business Financing Program seeks to increase the availability of loans and capital leases for establishing, expanding, modernizing and improving small businesses. It does this by encouraging financial institutions and leasing companies to make their financing available to small businesses.

Under the Program, a small business must apply for a loan or lease at a financial institution (bank or credit union) or a participating leasing company of its choice. If the loan or lease is granted by the financial institution or the leasing company, the federal government will reimburse 85 percent of the lender's or lessor's losses in the event of default.

Depending on your business financial needs, the type of business/industry you are in, and other factors, commercial banks or credit unions may offer the only, or the best, financing options for you.

Below are links to business banking services offered by banks and credit unions operating in Newfoundland and Labrador:

Financing Programs

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This section lists programs that are available to entrepreneurs in Newfoundland and Labrador through:

These programs can assist businesses with a variety of needs, such as:

  • start-up or expansion
  • marketing
  • exporting
  • hiring employees
  • training
  • research and development
  • insurance
  • etc.

Staff of these organizations also offer valuable non-financial assistance as well, in terms of business counseling, marketing expertise, information provision, and so on.

Be sure to check the eligibilty criteria and the application procedures of each program.  Often you are required to submit a business plan with your application. For more information on business plans, see the Interactive Business Planner.

This is not an exhaustive list of programs; rather a list of programs commonly accessed by business people in Newfoundland and Labrador.  For additional programs, check the Databases section of this Info-Guide.

Federal Government Departments/Agencies

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Agriculture and Agri-Food Canada - AAFC

Atlantic Canada Opportunities Agency - ACOA

Business Development Bank of Canada - BDC

Canada Council for the Arts

Canada Revenue Agency - CRA

Canadian Heritage

Canadian International Development Agency - CIDA

Canadian Television Fund

  • Broadcaster Performance Envelope Stream (in conjunction with Telefilm Canada)
  • Special Initiatives Stream (in conjunction with Telefilm Canada)

CANARIE

  • Advanced Networks - CA*net 4
  • Advanced Applications Development Program (AADP)

Environment Canada - EC

Export Development Canada - EDC

Financing

Insurance Solutions

  • Accounts Receivable Insurance
  • EXPORTProtect
  • Performance Security Insurance
  • Contract Frustration Insurance
  • Political Risk Insurance

Bonding

  • Performance Security Guarantee
  • Surety

Foundation to Assist Canadian Talent On Records - FACTOR

Farm Credit Corporation - FCC

Fisheries and Oceans Canada - DFO

Foreign Affairs Canada - FAC

Government of Canada - GoC

Human Resources and Social Development Canada - HRSDC

Indian and Northern Affairs Canada - INAC

Industry Canada - IC

International Trade Canada - ITCan

National Aboriginal Capital Corporation Association - NACCA

National Film Board of Canada

  • Filmmaker Assistance Program (FAP)
  • Programs for Emerging Filmmakers (scholarships; awards; etc.)
  • NFB as distributor

National Research Council - NRC

Natural Resources Canada - NRCan

NORTHSTAR Trade Finance Inc.

  • Term Finance
  • Floor Plan Finance

Parks Canada

Social Development Canada

Sustainable Development Technology Canada

  • Funding program

Transport Canada

Telefilm Canada

Provincial Government Departments/Agencies

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Department of Finance

Department of Fisheries and Aquaculture - F&A

Fisheries

Aquaculture

Department of Human Resources, Labour and Employment - HRLE

Department of Innovation, Trade and Rural Development - INTRD

Department of Natural Resources - NR

Agri-foods

Mines and Energy

Department of Tourism, Culture and Recreation - TCR

Culture and Heritage

Government Purchasing Agency - GPA

Multi-Materials Stewartship Baord - MMSB

  • Waste Management Trust Fund

Newfoundland and Labrador Film Development Corporation - NLFDC

  • Equity Investment Program
  • Development Program

Municipal Government

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  • Economic Diversification and Growth Enterprise (EDGE) Program (in conjunction with Dept of Finance and INTRD)
  • Arts grants (check with your local municipality)
  • Community Grants for non-profits; sports organizations; etc. (check with your local municipality)
  • Heritage grants (check with your local municipality)

Other Organizations

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Industry Associations

  • Memebership benefits - many business/industry associations offer benefits to members such as group insurance; credit cards; member-to-member discounts; etc. (check with your local industry association)

Canadian Youth Business Foundation - CYBF

Community Business Development Corporations - CBDC
(including Metro Business Opportunities Corporation - MBOC))

Craft Council of Newfoundland and Labrador

Music Industry Association of Newfoundland and Labrador - MusicNL

  • MusicNL Market Access
  • MusicNL Professional Development
  • MusicNL Sound Recording
  • MusicNL/Steele New Talent Demo Grants
  • Company Export Program
  • Touring & Showcasing Program
  • PromoFACT (through MuchMusic Network)
  • VideoFACT (through MuchMusic Network)

Newfoundland and Labrador Arts Council - NLAC

  • Project Grants
  • Sustaining Grants
  • Professional Artists' Travel Grants
  • ArtsSmarts Initiative
  • Cultural Assistance Plan for Emergencies (CAPE)

Newfoundland and Labrador Organization for Women Entrepreneurs (NLOWE)

Newfoundland Independent Filmmakers Cooperative - NIFCO

  • First Time Filmmaker Program

Ulnooweg Development Group Inc.
- Ulnooweg Loan
- Aboriginal Business Development Loan
- ABC Aboriginal Youth Business Loan

Visual Artists Newfoundland and Labrador - VANL

  • The VANL-CARFAC EVA (Excellence in Visual Arts) Awards

Writers' Alliance of Newfoundland and Labrador - WANL

  • WANL Book Awards
  • Manuscript Evaluation Service
  • Fresh Fish Award for Emerging Writers

Youth Ventures

  • Awards
  • Youth Venture participant loans (through most CBDC offices)

Recommended Reading

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This section provides links to documents that will help you identify and communicate your financial needs to potential lenders.

This section includes information on:

Online Small Business Workshop

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The Online Small Business Workshop (OSBW) is a Web-based workshop designed to provide you with techniques for developing your business idea, starting a new venture and improving your existing small business.

Financing Your Business (Session 3) starts with a description of the various types of financing available to entrepreneurs:

  • Equity
  • Long Term Debt
  • Short Term Debt
  • Leveraging
  • Alternative Sources of Financing

Equity
Equity funds come from personal moneys of the partners (such as savings, inheritance or personal borrowings from financial institutions, friends, relatives and business associates) and from stockholders of the shares in a corporation. These funds are normally unsecured and have no registered claim on any of the assets of the business, freeing those up to be used as collateral for the loans (debt financing). Higher equity creates " increased leverage." Leverage reflects the business ability to attract other loans and investment. An equity position of $30,000 may enable the business to obtain debt financing of up to three times that amount, $90,000. A fully-leveraged business has no further ability to borrow money.

More on Equity Financing :

  • Equity Financing Explained
  • Sources of Equity Financing
  • Approaching Equity Investors

Long Term Debt
"Term" refers to the time for which money (a secured loan) is required and the period over which the loan repayment is scheduled. A long term loan is arranged when the scheduled repayment of the loan and the estimated useful life of the assets purchased (e.g. building, land, machinery, computers, equipment, shelving, etc.) is expected to exceed one year.

More on Long Term Debt Financing :

  • Characteristics of a Term Loan
  • Types of Loan Security Agreements
  • Approaching Long Term Debt Lenders

Short Term Debt
Short term loans usually take the form of operating term loans (less than one year) and revolving lines of credit. These finance the day-to-day operations of the business, including wages of employees and purchases of inventory and supplies.

More on Short Term Debt Financing :

  • Short Term Debt Explained
  • Operating Term Loans
  • Revolving Lines of Credit
  • More Short Term Instruments
  • Approaching Short Term Debt Lenders

Leverage
This is the relationship of debt financing to equity financing (leverage or debt-to-equity ratio). A proposal which involves $6000 of debt, and is based on an equity contribution of $2000 is said to have a debt/equity ratio of 3:1. Generally, the lender would like to see a new business owner who is just building a reputation have this at 2:1 or even 1:1.

Alternative Sources of Financing

  • Suppliers Inventory Buying Plans
  • Renting and Leasing vs. Buying
  • Leasehold Improvements
  • Advance Payment from Customers
  • Factoring Accounts Receivables

Lending - The Basic Criteria

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This fact sheet outlines considerations and tips on presenting a proposal to borrowing money.

Dealing With Your Banker & Other Lenders

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This fact sheet offers suggestions on how to develop good relationships with your banker and other lenders.

Getting Started in Small Business

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This publication by the Canadian Bankers Association (CBA) contains information on the following topics:

  • Planning for a Business
  • Know Yourself
  • Know Your Market
  • Setting Up Your Business
  • How Will You Operate
  • Your Roadmap: The Business Plan
  • The Money You’ll Need
  • Maintaining A Healthy Business
  • You Are Not Alone - Helpful Sources of Information
  • Glossary of Terms

Interactive Business Planner

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The Interactive Business Planner is a computer software program that uses the capabilities of the Internet to assist you in preparing a 3 year business plan for a new or existing business. It is available of the Canada/Newfoundland and Labrador Business Service Centre web site.

Databases

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The following databases list programs available to businesses and not-for-profit groups. Besides the programs noted in the previous section of this Info-Guide, you may find additional programs of interest.

Canada/Newfoundland and Labrador Business Service Centre - CNLBSC
Programs and Services

Industry Canada - IC
Sources of Financing

Environment Canada - EC
Green Source

Canadian Heritage
Guide to Federal Programs for the Film and Video Sector

Imagine Canada (formerly the Canadian Centre for Philanthropy and the Coalition of National Voluntary Organizations)
Canadian Directory to Foundations and Grants (paid subscription)

Community Services Council - CSC
Funding Highlights Archive

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.



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Last Modified: 2006-08-23 Important Notices