There are more than one million small businesses in Canada (almost 150,000 in Alberta alone) and they come in all shapes and sizes. There are small businesses with almost 100 employees with departments, a board of directors, annual audits and many other aspects very similar to a large corporation. There are also mom-and-pop style small businesses with fewer than five employees, many of them family members. And there are thousands of small business in between.

But while small businesses may vary in terms operations, types and size, there is one thing almost every single one needs: financing. Like small businesses, financing can also come in many shapes, sizes and models, from government grants to bank loans, from venture capital investment to a cheque from an uncle, rich or not. A few lucky business owners even make it onto "Dragon’s Den," and get a chance to pitch their business to five highly successful Canadian business leaders in the hope of securing investment capital.

But whatever financing route a small business pursues, knowledge is power. Being aware of the many financing alternatives for small businesses can only help a business succeed. Or, at the very least, keep its options open. Here is list of where small businesses can look for financing.

Personal Funds

The majority of small businesses in Canada have used some type of personal funds to finance themselves. These types of funds can range from savings, mutual funds, collateral based on assets, paycheques from side jobs (or day jobs as the business is being built up), and even funds from family and/or close friends. According to Business Development Bank of Canada, investing your own funds into your small business is key to attracting other forms of financing, such as other investors or loans from banks. The thinking is that if you’re willing to risk your own funds to support your small business, you’re showing commitment to the plan. As a result, others may be more inclined to do so too.

Institutional Loans

Loans from banks/credit unions are another popular way of financing a small business. According to the Business Development Bank of Canada, more than 50% of small businesses use some type of institution-based credit to start, operate or expand their business. The types of loans and credit offered by banks can vary as much as small businesses do, from operating lines of credit to start-up loans, with different types of repayment options. Shop around but know that all banks and credit unions will require a solid business plan and an excellent credit history. Having a great idea for a business is one thing, but it's totally different than having a well-thought-out business plan.

There is also the Canada Small Business Financing Program, which helps businesses get access to loans by having the Government of Canada share the risk with the lender.

If institutions like banks and credit unions are unsuitable for whatever reason, there are alternative lenders, including online lenders like Evolocity and Ondeck. Now matter what sort of loan you choose, though, always be aware of the specific terms, especially repayment and interest options, before signing off.

Government Grants

Both the Canadian and the Alberta governments provide many different types of grants for small businesses. Many of these grants are for specific sectors likes Cultural Industries Grants, or the grants for tech, biotech and alternative energy industries through Alberta Innovates. Or, for specific target markets such as young entrepreneurs through the federal Futurepreneurs loan program, or Indigenous business through the BDC Indigenous Entrepreneur Loan. Competition for these grants can be tough and the application process is highly detailed and stringent. Many of these grants also require matching funds.

Find information on government grants (and some government loan programs) in Alberta here and in Canada here.

Business Incubators

Business incubators may not provide direct funding but their services may help small business save on their start-up costs. Many incubators provide office space, reception services, conference/meeting rooms, even laboratory or production space to develop products, as well as networking opportunities, advice and support. There are a number of business incubators in Alberta such as Innovate Calgary at the University of Calgary, The Northern Alberta Business Incubator in St. Albert, TEC in Edmonton, Catapult Entrepreneurs in Red Deer, Tecconnect in Lethbridge and the Agrivalue Processing Business Incubator for food-based businesses in Leduc.

Venture Capital

Finding angel investors can be a small business dream, especially for those hoping to expand their existing company into something larger or those who are looking for help with the development of a new product. But even though venture capital gets a lot of press and dollars invested can range into high figures, its impact is still small. Less than 1 percent of small business in Canada receive equity-based funding from venture capitalists.

Still, there are ways to find these types of funding by networking and meeting people at local start-up groups, or researching, contacting or joining groups like the Venture Capital Association of Alberta and the National Angel Capital Organization. Despite the headlines, though, the chances of finding substantial angel funding can be as rare as being invited to appear on "Dragon’s Den."


This is a highly popular and new way of finding financing for small businesses and their projects through sites like GoFundMe or Kickstarter. Most crowdfunding works on a specific project model with a business looking to develop a product or service and seeking smalls amounts of funding from a large group of people. For the most part, crowd funders aren’t expecting a share of the profits, but maybe a version of the product, or a thank you on the package. However, if the crowdfund campaign is offering a return on small investment, they are subject to provincial securities law, according to the Alberta Securities Commission. That means businesses are required to offer information such as a prospectus and meet other requirements. There are exceptions so it’s best to contact the ASC to learn more and find out whether your crowdfunding plan is allowed such exceptions. The National Crowdfunding Association of Canada as well as the ASC are good places to find information on regulations and other information on crowdfunding for small businesses. If you are considering the crowdfunding route, also ensure that your intellectual property is protected.