Applying for Commercial Loans

As an established business, you may have more success with banks. Make sure your business plan is up to date, shows your ability to manage your loan payments, and includes a clear description of your business and contingency plans. Be aware that banks are usually reluctant to make unsecured loans, so you must be willing to put up the collateral needed to get the loan.

Above all, make sure you maintain a good relationship with your lenders by always meeting your current loan obligations so that they are willing to loan you more money on good terms when you need it.

e. Factoring

You might want to consider factoring, which is a financing method in which a business sells its accounts receivable at a discount to a third-party funding source to raise capital. Factoring is very common in certain industries, such as the clothing industry, where long receivables are part of the business cycle.

In a typical factoring arrangement, you would make a sale, deliver your product or service, and generate an invoice. The factor would buy the right to collect on that invoice by agreeing to pay you the invoice's face value less a discount–typically 2% to 6%. The factor pays 75% to 80% of the face value of the receivable immediately, and forwards the balance to you (less the discount) when your customer pays the invoice.

You can find factors listed in the telephone directory and in industry trade publications.

f. Finding Investors or Other Equity Partners

Are you willing to share the ownership of your business? If so, you can look into finding equity investors to finance your business growth.

Angel investors are high net worth individuals who ideally have knowledge or expertise to complement your own, and who have money to invest.

• The B.C. Angel Forum introduces established companies to private equity investors. If you’re seeking equity financing of $100,000 to $1 million, you can apply to present your business and your growth strategy to pre-screened private and corporate investors. Contact the B.C. Angel Forum to see if your business would qualify.

Venture capitalists are professional managers that manage venture funds from high net worth individuals and corporations, or from institutional investors and government funds. 

• The Canadian Venture Capital & Private Equity Association (CVCA)represents the majority of private equity companies in Canada. The CVCA provides venture capital through investment in early stage companies, mostly in technology businesses. Contact the CVCA to learn more about what they have to offer and to find out if your business would qualify.
• The Canadian Financing Forum matches North American venture capitalists and corporate investors with serious entrepreneurs looking to build world-class technology companies. Visit their website for more information.
• The B.C. Government Venture Capital Program allows a small business to accept equity capital directly from investors, and enables investors to be actively involved in the growth of the small business. Refer to the Ministry of Jobs, Tourism and Innovation website for more information and to see if your business would qualify.