Money matters

Money matters

Finding the right pot of funding can make or break a fledgling business. How do you know which is right for you?

The Newfoundland Salt Company recently won the 2019 $50,000 Molson Partnership, a corporate competition that’s just one of many potential funders available to Atlantic Canadian entrepreneurs. The challenge is deciding which is best for your business idea. Here’s an overview of startup funding, from the usual suspects to emerging options.

Government Funding
There are a number of federal and provincial government programs that provide would-be entrepreneurs with loans and grants (sorry, you’ll have to do that research for yourself).

PROS: Multiple programs are aimed at all stripes of startups.
CONS: Some programs require EI eligibility. Others are restricted by age, region or industry. And it can be hard to track down the many programs available across multiple departments and governments. A one-stop portal would be helpful (hint, hint).
Banks Loans and Credit Lines

A bank or credit union is still a good option for many startups.

PROS: Interest rates are lower than with a credit card. You don’t lose business equity.
CONS: Loans must be repaid, and approval can sometimes be difficult.
Personal Assets

Put your life savings into your startup? It’s an option, but a risky one.

PROS: You’re investing in yourself, and you set the repayment terms.
CONS: You lose your financial buffer, and could lose it all for good if the business fails.
Call a Friend

Many businesses are launched with money from family or friends.

PROS: You may get funding at low or no interest.
CONS: Mixing family and money can be problematic.
Credit Cards

Starting your business with plastic doesn’t require applying for new credit.

PROS: If paid in full monthly, you can build credit or earn rewards.
CONS: Interest rates are high compared to a loan or line of credit.
Crowdfunding

Startups have successfully raised money through Kickstarter or Indiegogo.

PROS: Set-up cost is low, and you decide how much money to request.
CONS: You might not get the money you want, and you lose a percentage to the platform.
Corporate Contests

Some of the corporate prizes for entrepreneurs, like the $100,000 Telus Pitch contest, are hefty.

PROS: Prizes can be significant, and winners benefit from the corporate publicity machine.
CONS: There are only a few winners for each prize—and the application process can be time-consuming (for potentially no reward).
Angel Investors and Venture Capitalists

Angel investors and VCs can be a great source for the cash needed to get a business off the ground.

PROS: Many investors provide expertise as well as funding. If the business fails, you don’t have to pay them back.
CONS: A high rate of return is expected, and working with them usually means giving up equity.

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