Young entrepreneurs in Canada have access to financing in the form of grants and loans by banks, non-government organizations and associations, and under government programs.

Grants

Grants are offered by different entities in Canada, among which the Impact Canada Challenge Hub, Strategic Innovation Fund, and Quantum Leap. SMEs are offered grants under the Quantum Leap pharma-led funding program, and the main focus is on research and drug development. Eligible costs include laboratory and material supplies and benefits and salaries paid to students, postdoctoral fellows, and professional and technical assistants. CanExport offers grants to businesses with a focus on external market development and reimburses up to 75 percent of all project costs. Businesses operating across industry sectors are eligible provided that they have annual revenues between $100,000 and $100 million and up to 500 full-time employees. Only limited liability partnerships and incorporated legal entities qualify for financing.

Financing by Non-Profit Organizations

Futurpreneur Canada is a non-profit organization that offers mentoring and financing to young entrepreneurs aged 18 to 34. Eligible applicants benefit from 2 years of mentoring and receive up to $60,000. Funding is available in the form of unsecured loans and offered to businesses who meet the eligibility criteria. Only applicants who have a comprehensive business plan and relevant experience and training qualify. Businesses across sectors are eligible to apply, including skilled trades, services, and retail. Funding is also available to students, newcomers to Canada, and people working for non-for-profits. Women entrepreneurs are offered financing through the Women’s Enterprise Centre, Alberta Women Entrepreneurs, PARO Centre for Women’s Enterprise, and other entities.

Government Programs

Young entrepreneurs are offered government-sponsored loans to pay registration fees and buy leasehold improvements, commercial buildings, land, and used and new equipment. Ineligible assets and items include franchise fees, goodwill, inventory, and working capital. Loans with variable and fixed rates are offered through participating institutions such as the Bank of Nova Scotia, Bayview Credit Union, Progressive Credit Union Limited, and others.

Private Providers

This is yet another option for young entrepreneurs who are looking for business financing. Private providers offer loans to help businesses get access to working capital, buy equipment or real estate, or buy an existing business. The Business Development Bank of Canada, for example, offers start-up financing for advisory services, franchise purchases, start-up and marketing fees, fixed assets, and working capital. The main benefits are no prepayment penalties and longer amortization periods. Only applicants with good credit scores qualify provided that they show sales and market potential. Scotiabank also advertises business term loans that come with flexible repayment schedules, affordable variable and fixed rates, and penalty-free full and partial prepayments. Funding is offered to businesses that seek to invest in major fixed assets. CIBC features business loans of over $10,000 to help applicants purchase assets and make investments. Applicants benefit from short approval times, affordable payments, and access to working capital. The money can be used toward capital asset upgrades or fixed asset and equipment purchases. There are optional features such as no prepayment penalties, blended interest and principal, and choice between variable and fixed interest rates – see inflation: https://www.smartborrowing.ca/inflation-in-canada/. CIBC offers competitive interest rates to applicants who are able to provide collateral in the form of hypothec, cash equivalent or cash, or principal residence. Other financial institutions that offer business loans include the Royal Bank of Canada and TD Bank. Customers have access to a host of solutions such as small business vehicle lending, agriculture loans, and business lines of credit.

Young entrepreneurs face multiple challenges in Canada, from lack of experience, contacts, and financing to lack of access to space and facilities, and businesses having no inventory and low market value.

Resources

Young entrepreneurs have a more limited access to resources compared to established businesses. They are less likely to have access to resources such as coaches and mentors, networking events and opportunities, and business counselling. Startup businesses have less access to intellectual, human, and physical resources. Physical resources include things like distribution networks, manufacturing facilities and plants, inventory, equipment, buildings, and land. Without physical resources, the majority of businesses cannot function and deliver products or services. Human resources or employees are also essential to the functioning of any business. This is especially true for services industries such as retail, hospitality, financial services, entertainment, advertising, and staffing and consulting. Employees provide after-sales support and customer service, consult customers, and provide troubleshooting services. Intellectual resources are also essential to running a successful business and include copyright, brand, and patents. Other types of resources are customer databases, partnerships, and proprietary knowledge. Intellectual capital can also be divided into relational and structural capital. Relational capital, for example, refers to relationships with different partners, including local communities, regulators, employees, customers, and potential and existing investors. Formal and business contracts also fall in this category. Structural capital includes components such as trade secrets, intellectual property, data, applications, systems, and processes. Structural capital also covers elements such as media and advertising, business processes, and organizational culture. New businesses often find it more difficult to create organizational culture based on shared direction, identity, mission, and purpose. This also applies to things like situational awareness, business resilience, and motivated actions and reasoning.

Financial Resources

Securing sufficient financial is essential to the effective functioning of any business. Access to funding is one of the main challenges that young entrepreneurs face, and this is mainly due to lack of access to networks and limited exposure to credit. There are different ways to obtain financing for a start-up in Canada, including peer to peer networks, angel investors, loans by credit unions and banks, government grants and loans, and funding by non-government and non-profit organizations. Funding is offered under the Canada Small Business Financing Program as well as programs at the territorial and provincial level. In Manitoba, for example, entrepreneurs are offered funding under the Young Entrepreneurs Program, Business Start Program, and others. In Ontario, start-ups can apply under Starter Company, the Northern Ontario Young Entrepreneur Program, and Young Entrepreneurship Partnership Program. Start-ups in Nova Scotia are offered loans https://www.smartborrowing.ca/ and loan guarantees under two programs – Student Entrepreneurship and the Small Business Loan Guarantee Program https://www.nscc.ca/services/entrepreneurship/ The latter offers working capital loan guarantees for established businesses and start-ups and term loan guarantees https://www.smartborrowing.ca/refresh-financial-improve-your-credit-score-with-secured-credit-card/. In addition, start-ups are offered business lines of credit, loans, and credit cards by financial institutions such as CIBC, RBC, and other major banks. Business lines of credit help customers meet operating and unexpected expenses and are offered in US and Canadian dollars. Business loans are also available to help start-ups purchase property and equipment and grow and expand operations. Businesses can choose from different options, including long and mid-term operating loans and operating and short-term loans.