Small business financing

Small business ownership is not for the faint of heart. The odds are forever not in your favour to succeed, which is why finding the right financing for a small business can be a daunting task. The information contained in this article is to help with the financing portion of your small business, but don’t forget that marketing, public relations, and branding are also incredibly important. In fact, considering that nearly all small businesses fail, and you can expect to go up to 5 or even 8 years before turning a profit, I would suggest that you do your homework. Every small business owner I have ever worked with believed they were somehow smarter or better prepared for the market than everyone else, and therefore they would instantly be profitable. .. that my friends, has yet to happen.

Firstly, it is much easier to borrow money against an existing business versus starting your own business. In my experience, Scotia Bank and Bank of Montreal tend to be the two major banks who will consider small businesses most often. And when they do, they tend to look at the financial health of the applicant as a whole. They want you to have significant net worth, excellent credit, a sizeable down payment (30% minimum), and be entering into a low-risk industry. So, let's be clear - businesses that fail most often are coffee shops and tanning salons. Why, you might ask? Because despite what you may have heard, there is very little profit in coffee and tanning. 

Another excellent source of business financing is the Business Development Bank of Canada. The BDC’s purpose is to finance businesses; their account managers will work with you to come up with a realistic business plan, projected profits and estimated costs. They can put you on a payment plan that works with your business and often allow you an interest-only period to get you on your feet. They will loan up to a 2:1 ratio of their funds to yours, provided you can give them a personal guarantee. They will check in with you on an annual basis and offer some business counselling and networking events. Hats off to the BDC - we need them! The only issue I have really had with the BDC is that I have yet to meet a BDC account manager that has actually owned a business. 

Another thing to consider is that you will also need to have access to additional funds as you may find yourself putting more money into the business over the first couple years. I would suggest that you go to your bank and get a line of credit prior to starting your business.


For more information on small business financing, and other useful information call, text or email - [email protected] or 250.575.5478



Billie Aaltonen graduated from the University of Calgary with a degree in Economics and a Business Minor in 2003. After spending 7 years working in various corporate credit roles in Calgary’s oil and gas industry, she moved to Kelowna along with her husband and two young children. Billie is now a Senior Lending Advisor with Mortgage Architects Okanagan and also owns a few small businesses. She is an avid investor & entrepreneur at heart!

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