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Startup funding: How to get an edge on funding your business

12 min read
Richard Sklar

UPDATE: This startup funding post was originally published on 15 May 2018 and updated on 4 February 2021 and again on 1 July 2021.

Starting a business can often mean raising money. Unfortunately, the fallout from the COVID-19 pandemic is likely to complicate this task for anyone wishing to start a new venture in the near future.

If you’re looking to get funding for your Canadian business, there are still many approaches you can take as a Canadian citizen. You can try approaching a lending institution, working with the government, or reaching out to the public through crowdfunding sites.

Take a look at the five funding options below and see which one is best for your business.

5 places to find startup funding

Some small businesses require an initial investment to start — whether to buy a delivery van or a specialized piece of equipment. Here are five places to look for funding.

1. Friends and family

Who’s eligible: Anyone with a wide network of friends and family
Application process: In-person or over the phone
Terms: Varies by situation

For some entrepreneurs, friends and family are often the first source of startup funding. This can be a good option if you don’t have great credit or you’ve had trouble getting approved for a small business loan in the past.

A loan from family is also a good option if you don’t have the strong online presence required for successful crowdfunding.

There’s much less paperwork involved when borrowing from friends and family. Many will lend you the money without making you jump through a lot of extra hoops, but it all depends on your relationship with the person in question. If you have a history of being relatively careless with money, some of your loved ones might be hesitant to issue you a loan. This might be the case if you are deep in credit card debt.

The person handing out the loan is free to set whatever terms they feel are necessary. They could ask you to pay interest or to keep a detailed record of how the money will be used. They might ask you to give them something in return, such as an ownership stake in your new company.

If you’re looking to borrow from friends and family, have a clear, upfront conversation with your loved ones, describing your reasons for needing to borrow the money and how you plan on paying them back.

2.  Build your business with The American Express Business Edge Card

Application process: Online
Terms: $99 CAD annual fee*, 19.99% on purchases and 21.99% on funds advances*

Another option for those who need startup funding is going with a financial institution that rewards you. The American Express Business Edge™ Card is a great example of how to support your small business capital. From earning rewards for your business to growing your cash flow, the more you use the Card for business essentials, the more points you can earn.

In addition to providing the financial wind beneath your startup’s wings, the American Express Business Edge™ Card has a business-friendly points system, outfitted with benefits to help you build up your business:

  • Earn 3X the Membership Rewards® points on eligible business essentials, including office supplies & electronics, rides & gas and eats & drinks1
  • Leverage your cash flow with the option of carrying a balance or paying in full each month
  • Redeem points to offset business expenses2

Plus, if you apply today you can earn 45,000 Welcome Bonus points when you charge $5,000 in purchases to your Card in your first three months of Card membership, and an additional 1,000 points each month you spend $3,000. 3,4

The point is, do your research and go with the financial institution that gives you rewards against what you purchase the most. If you think the American Express Business Edge™ Card checks all your boxes, you can apply for an American Express Business Edge™ Card, online using RSVP code BEDGE.

3. Crowdfunding

Who’s eligible: Anyone with a good idea and an internet presence
Application process: Online
Terms: Varies by fundraising platform

Crowdfunding InKind

Crowdfunding relies on small contributions from many people to generate startup funding.

There are a range of websites like OurCrowd to help people like you get a project off the ground. Some other options:

  • Sites like GoFundMe are geared towards personal projects and those dealing with a personal crisis such as an injury or medical emergency.
  • Organizations like Kickstarter are more suited to creative projects like making a film or creating a new line of T-shirts.
  • Indiegogo tends to cater to a wide variety of projects, but it might be hard to stand out in the crowd.
  • You could also try a niche crowdfunding website that funds projects related to your industry. For example, InKind caters specifically to food startups and restaurants.

Every crowdfunding platform has its own terms, with different fundraising options. The website might take a portion of the money you raise, or you might have to reach your fundraising goal before you can get access to your funds.

4. Bank loan

Who’s eligible: Anyone with a good credit score and a business plan
Application process: Online or in-person application
Terms: Varies by lending institution

Some banks and lending institutions will offer their own small business loans, while others partner with the Canadian government to help ease the burden on small business owners. Every lending institution will have their own terms for the loan — stricter than crowdfunding terms — and you’ll need a detailed business plan to get started. The plan should cite the idea behind your company, what you need to buy and how you plan on making money.

Bank loans usually entail a personal guarantee of 25 percent of the total loan amount; a competitive or fixed interest amount, depending on how soon you can pay off the loan; and a set monthly repayment schedule.

You could decide to make lower monthly payments in the beginning of the lending period with larger payments 10 or 15 years down the road. This might make the most sense if you’re trying to pay off expensive equipment or your new business doesn’t have a lot of startup funding in the short-term.

Paying less upfront can lead to more interest down the line, so make sure you have a detailed plan for how your company’s revenue will grow in the coming years, so you can pay off the loan. You don’t want to be in debt forever.

If you have a good credit score and a strong business proposal, there might be several different banks looking to lend you money. You can try visiting local lending institutions to see which bank will offer you the best terms and the lowest interest rate.

5. Government loan or grant (if you haven't already done this)

Who’s eligible: Small businesses or startups operating for profit in Canada, with gross annual revenues of $10 million or less
Application process: Online or in-person application (business plan required)
Terms: Varies by funding program

Crowdfunding Government Loan
A carefully written business plan is essential when applying for a bank or government loan.
Photo: Nik MacMillan on Unsplash

The Canadian government offers a range of startup funding programs that you can use to get your business off the ground. One of the most popular options is the Small Business Loan Program, which is reserved for startups operating in Canada with less than $10 million in annual revenue. These loans are not available to those in the farming industry, nonprofits or religious organizations.

Such loans must be used for one of the following:

  • Purchasing or improving land and buildings used for commercial purposes.
  • Paying for renovations to premises occupied by the business as a tenant.
  • Buying or improving new or used equipment (including commercial vehicles).

Of course, this is just one of the many startup funding options available from the Canadian government. They have many different programs that cater to entrepreneurs, nonprofits and businesses large and small, across a wide range of industries. Many of them are tied to government incentives such as:

  • The promotion of clean energy
  • Expanding to new international markets
  • Reducing poverty
  • Improving education
Crowdfunding Open Sign
A government loan could be the key to launching your new business.
Photo: Finn Hackshaw on Unsplash

If you’re not sure what kind of government grant or loan you should be applying for, you can also try working with a third-party government funding planning company like Mentor Works. A consulting company can help you put together your application, maximizing your chances of success.

Take a look at their list of all the Canadian government funding programs available to you, including those for special populations such as women entrepreneurs, minorities and native peoples.

Good luck in your quest.

The information contained in this blog post is provided for informational purposes only, and should not be construed as an endorsement or advice from GoDaddy on any subject matter.


* Subject to approval. The preferred rate for purchases is 19.99% and funds advances is 21.99%. If you have Missed Payments, the applicable rates for your account will be 23.99% and/or 26.99%. See the information box included with the application for the definition of Missed Payment and which rates apply to charges on your account and other details. Maximum of 99 Supplementary Cards. Supplementary Card applicant must be the age of majority.

  1. You can earn Membership Rewards points for eligible purchases at American Express retail merchants as follows: Earn 3 points for every $1 at or for (i) office supply retailers whose primary business is the sale of office supplies in Canada, (ii) electronic goods retailers whose primary business is the sale of electronics in Canada, (iii) stand-alone automobile gasoline stations in Canada, (iv) local commuter transportation in Canada including subway, streetcar, taxi, limousine and ride sharing services, (v) restaurant, quick service restaurant, coffee shop and drinking establishments in Canada, and (vi) delivery of food in Canada as a primary business, but not including groceries, up to a combined maximum of 75,000 Membership Rewards points earned on net purchases posted to your account annually on these categories. Once the maximum is reached, you will no longer earn at 3 points for every $1 regardless of any deductions of points for credits, returns and adjustments. Earn 1 point for every $1 thereafter. Calculation resets to zero each year on the Cardmembership anniversary date. Purchases at merchants where these categories are not their primary business such as general merchandise retailers do not qualify. Merchants are typically assigned codes and categorized based on what they sell. Earn rate of 1 point for every $1 applies when the merchant code is not in an eligible category, using a payment account or service of a third party, a card reader attached to a mobile phone or online retailer that sells goods of other merchants or the merchant category is otherwise not identified. Provided your account is in good standing, points can be earned on eligible purchases less credits and adjustments. Interest charges, annual fees, other fees and cash equivalent transactions are not purchases and do not qualify for Membership Rewards points. Points are not eligible for transfer to programs that offer airline and frequent flyer redemptions.
  2. You can redeem Membership Rewards points for a statement credit towards an Eligible Purchase charged to an Eligible Card. You must redeem a minimum of 1,000 Points per redemption. Redemption rates may vary by Eligible Card. Statement credits on your Card Account should not exceed the aggregate amount of the Eligible Purchase(s) on your Eligible Card. You can register for online services to view your Eligible Purchases and to redeem online. Only Eligible Purchases posted to your Card Account during the last 3 months, up to 150 most recent Eligible Purchases will be displayed for redemption. If you wish to redeem points towards an Eligible Purchase within the last 12 months that is not displayed online, please contact us at the number listed on the back of your Card.
  3. 45,000 Welcome Bonus points - This offer is only available to new American Express Business Edge™ Cardmembers. For current or former American Express Business EdgeTM Cardmembers, we may approve your application, but you will not be eligible for the Welcome Bonus. Offer subject to change. To qualify for the Welcome Bonus, you must have at least $5,000 in net purchases posted to your account in your first 3 months of Card Membership. Account must be in good standing. Please allow up to eight weeks for the Welcome Bonus to be awarded.
  4. 1,000 Monthly Bonus points - To qualify, you must have at least $3,000 in net purchases posted to your account by the last day of each billing period. Purchases made during a billing period but posted after the end of that billing period may not count towards eligible spend for that month. If this occurs, that purchase will count towards eligible spend for the next billing period. For example, if your monthly billing period is from Oct 15 to Nov 14, a purchase made on Nov 14 (transaction date) and posts on Nov 15 (posting date) may not count for eligible spend for that month. In this case, that purchase will count towards spend in the next month's billing period. Account must be in good standing. Please allow up to eight weeks for your bonus points to be awarded.

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