Published in the Star Business Club
By Jacob Serebrin – Sept. 20, 2013
Whether new or established, finding funding is always a challenge for small businesses.
Federal, provincial and large municipal governments offer a wide variety of industrial support – grants, loans, loan guarantees and tax credits – but with information about these programs spread out on literally thousands of different web pages, just finding out what’s on offer can be difficult and time-consuming.
Teri Kirk is trying to change this; she’s the President and CEO of the Funding Portal, a Toronto-based company with a searchable online database that contains information on more than 4,000 government programs and 500 private funding sources.
“On average, to do a fairly thorough search without the Funding Portal, it’s about 11 business days,” Kirk says, “now you can do it in seconds.”
According to Kirk, the fact that multiple levels of government are involved, with multiple programs at each level,makes funding even more difficult to track down. She says the federal government alone has over 800 industrial support programs.
Katherine Roos, the small business manager at Enterprise Toronto, says the average business in Toronto is started with only $5,000. For businesses in the tech sector, she says incubators and accelerators can be a good way to make contacts with potential funders.
Paul Higgans, a business coach at Montreal’s Youth Employment Services, a non-profit that helps people find jobs and start businesses, says that because information on funding programs can be hard to find, using a private index might be a good idea, “as long as the cost is modest.”
But he says that, before an entrepreneur applies for funding, they should go over their business plan.
“Financing might not be an issue,” he says. “You might be able to bootstrap.” The amount of funding available to businesses varies from province to province.
According to Kirk, Quebec has over $6 billion worth of programs, while Ontario has $4 billion. There are also programs specifically targeted to young entrepreneurs.
Both Higgans and Roos recommend entrepreneurs under 39 look into the Canadian Youth Business Foundation, which offers startup, innovation and expansion financing on its own and through a partnership with the Business Development Bank of Canada.
But government funding isn’t everything.
“In order to apply successfully for government funding, generally, you’re going to have to show private capital,” says Kirk. This could come in the form of self-financing, bank loans or lines of credit, or third-party investment. “Government funding is not an end, it’s a beginning,” she says.
In addition to their search tools, the Funding Portal will also evaluate funding applications to make sure they’re filled out correctly and evaluate an applicant’s likelihood of success.
According to Kirk, many funding programs are highly targeted and “80 per cent of applications that go to funders are rejected because they don’t fit with the criteria.