Small businesses often start with a great idea, but any entrepreneur will tell you that launching a new business requires a few other important items, including access to a healthy budget.
Fortunately, business owners have a range of options when it comes to funding for small business in Ontario that cater to different business needs and stages. From financial institutions and credit unions to private lenders and government grants, here are a few funding options available to entrepreneurs:
Should you do loans or a line of credit for your business?
Whether through banks, credit unions or government‑backed loan programs, loans and lines of credit offer different ways to access the capital a small business needs to get started and grow.
A business loan provides a lump sum of money upfront that is repaid over a fixed term with scheduled payments, making it well suited for larger, one‑time investments such as purchasing equipment, renovating a space or expanding operations. A line of credit, on the other hand, offers more flexibility by allowing businesses to borrow only what they need, when they need it, up to a set limit. This is ideal for managing cash flow, covering short‑term expenses or handling unexpected costs. Interest is typically charged only on the amount used.
Most traditional financial institutions offer small business loans with flexible terms. In Ontario, credit unions are known for investing in small businesses as funds are invested directly with the community they serve. For this reason, credit unions often provide more competitive interest rates and a uniquely personalized approach, offering specialized products for businesses in early stages. For example, Meridian’s Accelerator Loan program, supported by BDC, offers flexible-term financing for improved access to working capital for Ontario-based businesses that have been in operation for at least 12 months.
To maximize your borrowing potential, it’s important to come prepared with a solid business plan for your new venture, especially if the business is brand new with no financial statements to show, as your lender will want to ensure you’re able to eventually repay the loan. In addition, your financial partner will look at your personal credit beacon to determine how you manage finances, which may put you in a better spot to access financing. And, a lender will also typically ask for the loan to be secured, either by physical assets or a personal guarantee.
Ontario government grants for small businesses
Government grants are often seen as a lifeline for small businesses because, unlike loans, they don't need to be repaid, and in most cases can be used in combination with other funding options. Various grants are available through federal, provincial, and municipal programs that cater to different industries, business types, and growth stages. Here are a few available to Ontario small-business owners:
- Entrepreneurs can look for different regional investments through an interactive map to see what’s available, and explore Ontario’s Regional Development Program, which offers grants and loans for growth projects.
- The Canada-Ontario Job Grant Program offers funding for employers to invest in training.
- The Ontario Starter Company Plus program supports small business owners through grants and consulting services.
- The Community Futures program offers loans and startup advice to small businesses in rural and remote Ontario communities.
- Business in the Streets (BITS): a community-based program offering entrepreneurship training and access to grants and micro‑loans for eligible small business owners.
- Federally, the Canada Small Business Financing Program assists entrepreneurs in securing loans from financial institutions by sharing the risk with lenders.
To increase your chances of securing a grant, ensure that your business plan is clear, and that your growth goals align with the program's objectives. A dedicated business account can improve your chances when applying for grants. Explore our business account offer.
Angel Investors, Venture Capital, and Crowdfunding in Ontario
Startups with high growth potential may find substantial financial support from angel investors, venture capitalists or even personal or family partners, in exchange for equity in the company. In Ontario, organizations like Angel Investors Ontario and the Ontario Network of Entrepreneurs help connect entrepreneurs with investors. Additionally, crowdfunding platforms like FrontFundr provide opportunities for small businesses to raise funds from a wider audience.
These options are more likely to be viable for small businesses with a high growth potential, an experienced management team and a well-defined business plan.
Exploring funding for small businesses in Ontario may seem complex, but with a bit of research and preparation, you can identify the best solutions for your business’s needs. The right mix of funding – whether it’s through government grants, traditional loans or alternative lenders – can help you launch your business and work towards achieving your goals and growth targets.
For more on how funding can elevate what’s possible, reach out to a Meridian small business advisor and explore our latest business account offers.