Financing for Established Businesses Info-Guide

The following document was prepared by the Canada-Ontario Business Service Centre (COBSC), a single point of access to information on federal and provincial government programs, services and regulations.

This guide is designed to help navigate through federal and provincial government programs, services and resources that may be of interest to existing businesses seeking financing in Ontario.  Although many questions will be answered in this guide, the list of resources given here is not exhaustive.

Need more information?

Click: Canada-Ontario Business Service Centre
Call: 1-800-567-2345
Visit: The Regional Access Program Location Index for a listing of offices in Ontario.

TABLE OF CONTENTS

1. Overview of Business Financing
2. Sources of Financing Web Site
3. Canada Small Business Financing (CSBF) Program
4. Business Development Bank of Canada (BDC)
5. Ontario Community Futures Development Corporations (CFDCs)
6. Community Small Business Investment Fund Program
7. Web Sites and Publications of Interest

1. Overview of Business Financing

When looking into applying for a loan for your business, it is important to study different avenues of financing. We have included here a few brief definitions of various sources of financing.

Banks and Other Financial Institutions

The most common source of financing for small business is the chartered bank. Banks can provide a number of financing options, such as short-term loans, long-term mortgage loans and, in some cases, loans against inventory or accounts receivable. Other important sources of financing in this category include trust companies and credit unions.

Credit Cards and Personal Lines of Credit

For very small firms and home-based businesses, credit cards and lines of credit often provide a ready means of obtaining small scale debt capital. While convenient, they bear relatively high rates of interest and limit the amount of capital available.

Partners and Business Angels

Angels are simply wealthy individuals who invest directly in small firms owned by others. Angels tend to finance the early stages of the business. Attracting partners who make an investment in the business is also an option.

Venture Capitalists

Institutional venture capitalists are among the more important sources of risk capital. Venture capitalists are usually private or publicly-sponsored pools of capital that acquire a level of participation in the firm applying for financing. Venture capital can be an effective means of enabling the growth potential of the firm.

2. Sources of Financing Web Site

Sources of Financing is an Internet resource for locating traditional and alternative sources of small business financing. This site provides interactive access to objective information on appropriate forms of public and private sector sources of debt and equity financing, including the following: angel investors, banks, factoring, leasing and venture capital.

For further information:
visit the Web site Sources of Financing
see the document  Sources of Financing

3. Canada Small Business Financing (CSBF) Program

This program, under the Canada Small Business Financing Act , can assist businesses in obtaining term loans of up to $250 000 to help finance fixed asset needs. The loans are made directly by a qualified lender (chartered banks, caisses populaires, most credit unions, many trust, loan and insurance companies). The loans may be used to finance the following:

Loans under the CSBF Program cannot be used to:

• improve a family dwelling for non-commercial purposes;
• purchase shares;
• finance working capital (finance inventory, accounts receivable, etc.);
• permits and licenses used in the operation of eligible assets;
• franchise fees;
• feasibility studies;
• professional fees (e.g. legal, accounting and appraisal);
• survey costs;
• building permits;
• vehicle for personal use;
• intangibles (i.e research and development costs, prepaid expenses, good will, etc,); or
• purchase real estate for resale.

For further information:
visit the Web site Canadian Small Business Financing Program
see the document Canada Small Business Financing (CSBF) Program

4. Business Development Bank of Canada (BDC)

The BDC offers financial services with a variety of flexible terms and conditions, such as stepped principal payments, seasonal payments, and, in some cases, deferred principal repayment. Some of the BDC's financial services are outlined below.

The BDC's Term Financing can be used for a variety of commercially-viable projects, including expansion projects, plant overhauls, the purchase of existing businesses and the acquisition of fixed assets. In some cases, the loan may be used to reconstitute working capital depleted by capital expenditures or to finance sales growth.

For further information:
see the document Term Financing Solution

Productivity Plus Financing Solution
Productivity Plus Financing is designed for manufacturing and processing companies that want to increase their productivity but need financial support to acquire equipment. These loans can range up to $5 000 000 for manufacturers looking to increase their productivity. BDC can offer up to 100% of the cost of new and used equipment; an additional 25% can cover incidental costs such as installation, training and working capital.

For further information:
see the document  Productivity Plus Financing Solution

BDC Venture Capital can be used to help finance a company's capital-intensive research and development cycle, to broaden a company's export market or to take a company public. BDC will consider capital investments at any stage of a company's life cycle from seed to growth, from acquisition or expansion to turnaround and will invest in both private and publicly listed companies.

For further information:
please call 1-877-232-2269
visit the Web site Business Development Bank of Canada
see the document Venture Capital

Co-Vision - Start-up Financing Solution
For entrepreneurs experiencing their first wave of growth, the Business Development Bank (BDC) offers Co-Vision, a customized term financing solution up to $150 000 for new businesses demonstrating long-term viability.

For further information:
see the document  Co-Vision - Start-up Financing Solution

5. Ontario Community Futures Development Corporations (CFDCs)

The CFDCs operate in selected communities in rural and Northern Ontario. Through federal support, CFDCs administer local investment funds to help finance existing small businesses for expansion or stabilization plans that help maintain or create jobs. Repayable financing of up to $150,000 on commercial terms through loans, loan guarantees or equity investments is available when financing from other sources is insufficient. All CFDC financing decisions are made at the community level by the local boards of directors. CFDCs also provide advice, information and referral service to local businesses and entrepreneurs.

For further information:
please call 1-800-567-2345 or (416) 775-3456
visit the Web site CFDC in Ontario

6. Community Small Business Investment Fund Program

The CSBIF Program provides Ontario small businesses with greater access to capital, by encouraging the formation of community sponsored venture capital pools, and by providing eligible investors with investment incentives for purchasing Class A shares of registered CSBIFs. Once registered and equipped with invested capital, a community fund is held to invest in eligible companies located within the sponsors’ community sector. By doing this, Ontario CSBIFs provide for the Ontario small companies a complementary source of investment capital necessary to the economic growth and the creation of jobs.

For further information:
visit the Web site:
Community Small Business Investment Fund Program
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_2331_1.html
Important Changes to the CSBIF Program
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_28403_1.html

7. Web Sites and Publications of Interest

Export Controls On-Line (EXCOL) is a user friendly web-based application where exporters are able to submit applications for export permits and certificates, as well as request amendments. EXCOL also offers the functionality to submit online, quarterly utilization reports for military goods, as well as the ability to print selected permits in your office.

For further information:
visit the Web site:
Export Controls On-Line (EXCOL)
http://www.dfait-maeci.gc.ca/trade/eicb/EXCOL/excol-en.asp
see the document  Export Controls Online (EXCOL)

The EXPORT Finance Guide from Export Development Canada helps Canadian small businesses understand and access information tools relating to exporting at each stage of the export transaction cycle.

For further information:
visit the Web site:
EXPORT Finance Guide
https://www.edc.ca/exportfinanceguide/eff_e.asp
see the document  EXPORT Finance Guide

Lending - The Basic Criteria

Dealing With Your Banker & Other Lenders

Canadian Bankers Association

Financial Glossary
http://strategis.ic.gc.ca/epic/internet/insof-sdf.nsf/en/h_so03335e.html

Steps to Growth

Your Guide to Small Business (Ministry of Small Business and Entrepreneurship)
http://www.sbe.gov.on.ca/ontcan/sbe/en/st_yrguide_en.jsp 

Interactive Business Planner

Small Business Financial Service Charges Calculator
http://strategis.ic.gc.ca/epic/internet/insof-sdf.nsf/en/h_so03333e.html

• Important Notices
• Business Guides Available at the COBSC
• Financing
• Financing for Starting a Business Info-Guide
• Financial Statistics and Data
• Finance and Taxation Information for Enterprises

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.