Microloans for Starting a Canadian Small Business

Aug 14, 2023

There are individuals in Canada whose innovative ideas and talents would have gone to waste without the assistance of startup loans provided by microfinance programs. Although microfinance is often associated with developing countries, it is also actively practiced in Canada. This is promising for aspiring entrepreneurs seeking financial support to kickstart their ventures.

 

How Much Do You Need to Start?

A study conducted by Intuit Canada on entrepreneurship in Canada revealed that 58% of small business owners in the country began their ventures with less than $5,000. The study further highlighted that for sole proprietorships, this percentage was even higher, with 77% reporting starting with less than $5,000.

However, obtaining this $5,000 can be just as challenging as borrowing $5 million for individuals with poor credit and no collateral. Fortunately, various entities, including the Canadian government, credit unions, and community groups, have devised programs that provide microcredit options (small business loans under $20,000) to individuals facing difficulties in securing conventional business loans.

Below are some potential sources of microloans to consider when starting your small business in Canada

 

 The government offers grants to businesses with the aim of promoting the growth of specific businesses in specific locations. For example, they may focus on establishing a biotech center in Ontario or increasing the number of call centers in Nova Scotia.

This approach benefits those involved in the industries the government wants to encourage. However, the majority of entrepreneurs in Canada aspire to start small-scale retail businesses like bakeries, clothing stores, and bookshops. Furthermore, Small Business Grants often have eligibility criteria tied to a specific demographic and place of residence.

 

Here are a few examples of grants available for small businesses in Canada:

 

In Canada, numerous microfinance programs are location-specific, requiring individuals to reside in particular regions to be eligible. To determine the microloans accessible for starting or expanding a business in your area, refer to this list.

  • 3+ Economic Development Corporation: If you reside in Dieppe, Moncton, or Riverview in New Brunswick, you can access the Seed Capital Program by following the provided link.

     

  • Access Community Capital Fund: As a registered charity, Access offers microloans based on an individual’s character rather than collateral or credit history. Their aim is to assist those who wish to enhance their standard of living by initiating a business in the Greater Toronto area. For first-time borrowers, the loan limit is $5,000, while second-time borrowers can avail up to $10,000. Access also offers loans of up to $15,000 to foreign businesses launching in Canada.

     

  • Alterna Savings Community Micro-Finance Program: This bank, located in Ontario, provides small business loans ranging from $1,000 to $15,000 to aspiring entrepreneurs within any Alterna service area.

     

  • Centre for Entrepreneurship Education and Development (CEED): The Seed Capital Program by CEED is available to businesses in various cities across New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. This program offers loans from $5,000 to $25,000 for individuals aged 18 and above who wish to start a business. Young entrepreneurs aged 19 to 39 can also utilize the funds as a business growth loan.

     

  • Economic Development Greater Saint John: This organization caters to entrepreneurs in the greater Saint John area by providing a wide range of resources, including funds to start, expand, or improve small businesses.

     

  • Kick$tart: If you are under 35 and reside in Newfoundland and Labrador, you can acquire a low-interest loan of $5,000 to commence or expand your business. It is worth noting that there is no age requirement to access this program as long as a parent or guardian is willing to co-sign the loan for individuals under 18. Additionally, there are other microfinance programs targeting specific groups that are available to qualifying individuals across most parts of the country.

     

  • Metro Business Opportunities (MBO): To qualify for the SEED program in Newfoundland and Labrador, it is necessary to be located in the St. John’s-Mount Pearl area.

     

  • In St. John’s, there is also a Micro-Business Development Group (MBDG) Pilot Project designed for entrepreneurs planning, starting, or expanding a micro-business. This program provides microloans of up to $10,000 along with training, business counseling, and networking opportunities.

     

  • Microcrédit Montréal (formerly Montreal Community Loan Association or ACEM): This community organization extends loans ranging from $500 to $20,000 to low-income individuals residing on the Island of Montreal. The loans are specifically intended for individuals who aspire to start their own businesses but face challenges in obtaining credit through conventional channels.

     

  • Start-up Business and Microloans: Vancity Credit Union in Vancouver, British Columbia, offers a range of small business loans to support startup entrepreneurs in developing green businesses or launching green technologies.

     

  • Ottawa Community Loan Fund: If you are in the Ottawa area and require funds to start or expand a business, you can access loans of up to $15,000 through this organization.

     

  • Seed Capital Initiative: Although not a microloan program per se, this government initiative, operated by the Atlantic Canada Opportunities Agency (ACOA), provides loans of up to $20,000 to aspiring entrepreneurs in the Atlantic provinces. The Seed program also allows clients to access up to $2,000 for business training and consulting without the obligation to repay.

     

  • Student Entrepreneurship Program: The Government of New Brunswick offers interest-free loans of up to $3,000 to students who aim to start a summer business. The business must create at least one full-time summer job and provide the applicant with valuable business experience.

     

  • Western Economic Diversification Canada: This government agency facilitates a microloan program that grants small business loans to enterprises throughout western Canada.

     

     

  • Windmill Micro Loans: IAF loans cater to tradespeople, professionals, or skilled workers from other countries who require licensing or training to work in their respective fields within Canada. Immigrants living in Canada can obtain loans of up to $15,000 through this program.

If you can’t find any microloans available in the provided list, there’s good news—the microfinance movement is expanding. To explore more options, consider reaching out to local economic and social development agencies or inquire with your credit union or caisse populaire if they offer similar programs. Remember, just because a bank denies your loan application doesn’t mean there aren’t other avenues to secure the funds you need to pursue your dream.

.

 

CBES is here to assist you; feel free to contact us for expert guidance.

 

 

Launch Your Business in Canada

Contact us right now and we will help You!

Contracts for Business Owners 101 in Canada

Every business transaction is based on a contract – whether written, verbal, or by conduct. The presentation discusses various aspects of business agreements, what should be included, and which details should be reviewed by business owners, and addresses the main...

How to Register a Trademark in Canada

If you've thought about obtaining a trademark for a certain element of your Canadian company, it could prove beneficial in safeguarding vital aspects of your business or products. Although not obligatory, understanding the nature of trademarks and the involved...

How Much Does It Cost to Incorporate in Canada?

  The cost of incorporating in Canada varies based on the type of business incorporation and the location where you choose to incorporate. Depending on your intentions of operating nationwide or within a specific province or territory, you can opt for either...

The Steps to Closing a Business in Canada

  Closing a business in Canada is a straightforward task, although it involves more than just notifying customers, selling off remaining inventory, and settling debts. Additionally, it is necessary to formally terminate your business name or dissolve your...

Different Types of Corporations in Canada

When you decide to start a business in Canada, you have multiple alternatives when it comes to structuring your business. One possibility is to establish a corporation, and in Canada, there are numerous options available to choose from. Creating a corporation can be...

Should I Incorporate In Canada? Corporation vs Sole Proprietorship

Should I Incorproate in Canada – All your questions answered! The question of whether and when to incorporate seems to create lots of confusion and many online resources may seem misleading, not thorough enough or inconsistent. Incorporating will be justified in any...