A young mother who saw the need for a children’s consignment store. A man who dreamed of having his own food truck business. These are just two examples of people whose skills and business ideas would have been wasted without the startup loans that microfinance programs offer.
When we think of microfinance, we usually think of developing countries. But even in Canada, the concept of providing credit and financial services to people who would otherwise have limited or no access is very much alive. This is good news for aspiring entrepreneurs looking for seed capital.
How much do you need?
58 percent of small business owners in Canada started with less than $5,000, according to a study of entrepreneurship in Canada by Intuit Canada. For one-person stores, the number is even higher, according to the study, with 77% saying they start with less than $5,000. , ,
But that $5,000 can be as difficult as trying to borrow $5 million if you’re a person with bad credit and no collateral. Fortunately, the Canadian government, credit unions, and community groups have developed programs that offer microcredit (small business loans under $20,000) for people who would have trouble getting traditional business credit.
Who Offers Microfinance Programs?
Many microfinance programs in Canada are location-based you must live in a specific region to qualify. Check this list to see what microloans are available to start (and sometimes grow) a business where you live.
- 3+ business development company: If you live in the Dieppe, Moncton or Riverview area of ??New Brunswick, you can access the Seed Capital program here.
- Access to the Community Equity Fund: Access is a registered charity that provides character-based microcredit to people without collateral or credit who want to improve their standard of living by starting a business in the greater Toronto area. Loans are a maximum of $5,000 for first borrowers and $10,000 for second borrowers. The company also makes loans of up to $15,000 to foreign companies incorporated in Canada.
- Alterna Savings Community Microfinance Program: This Ontario-based bank offers small business loans ranging from $1,000 to $15,000 for those wishing to incorporate businesses in any Alterna service area.
- Center for Entrepreneurship Education and Development (CEED): The Seed Capital Program is available to businesses in several cities in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island and offers loans ranging from $5,000 to $25,000 for people aged 18 and over who want to start a business. Young entrepreneurs (aged 19-39) can also use funds as business growth loans.
- Community microcredits: Billed as Canada’s first peer-to-peer microcredit program, this not-for-profit corporation supports businesses on southern Vancouver Island, British Columbia. They offer startup loans of up to $5,000 and expansion loans of up to $10,000 to entrepreneurs who are unable to get the loan they need from a bank or credit union. Anyone can lend money to successful loan applicants through the organization’s website. (There is currently a $250 minimum for lenders.)
- Economic Development Greater Saint John: The Greater Saint John Development Organization provides a myriad of resources to entrepreneurs in the area, including funding to start, expand or improve a small business.
- Kick$tart: If you are under payday loans direct lender Homestead the age of 35, live in Newfoundland and Labrador and are unable to raise the money you need to start or expand your business, you can get a $5,000 low interest loan. (Note that you do not have to be 18 or older to participate in this program, as long as your parent or guardian is willing to co-sign the loan if you are under 18.) Other microfinance programs target specific groups and are available to qualify people in (most) parts of the country.
- Metro Business Opportunities (MBO): To access the SEED program in Newfoundland and Labrador, you must be in the St. John’s-Mount Pearl area.
- There’s one in St. John’s too Micro Business Development Group (MBDG) Pilot project for entrepreneurs planning, starting or expanding a micro-enterprise. The program offers microloans of up to $10,000, as well as training, business advice and business networking.
No microloans listed for you?
The best news of all is that the microfinance movement is spreading. If you can’t find any loans to apply for in the list above, contact your hometown economic and social development agencies and ask your credit union or Caisse Populaire if they offer such a program. Just because a bank won’t give you credit doesn’t mean the money you need to make your dream come true is out of reach.
