In our March 26th blog, “Looking for Start-up Funds?”, we talked about traditional and non-traditional sources of funding. Finding funding for businesses can be complicated, so when one funder can’t independently meet all of your needs, the question may arise “Can I use more than one source of funding for my business?”
The short answer is yes – in fact it might be imperative to seek more than one source both to meet the amounts required, but also to comply with the individual rules of one program or another.
- Some sources of funding may offer a smaller amount of money, but be very flexible regarding the types of expenses that may be covered. An example is the Canadian Youth Business Foundation’s Start-Up Program, which lends up to $45,000 to be used for almost all types of expenses as long as they are justified by a well written business plan.
- Other sources may offer a much larger amount of money, but have strict rules about what expenses may be covered. A common example is the Canada Small Business Financing Program, which can offer up to $500,000 in loans, but that can only be used for buildings, land, leasehold improvements, telecommunications equipment and machinery.
One important factor is to make sure that your start up budget and financial projections reflect the injection of financing from all sources, as well as the principal and interest payments for each. There is no rule against using more than one source of financing, but each funder will want a clear picture of the whole businesses debt and expenses before making a decision.
Another benefit to displaying your start-up budget in a way that clearly identifies each source of funding is that it can easily demonstrate how much of the capital you are planning to contribute as the owner. Showing a strong personal investment will strengthen most applications, and for some will help to meet a condition of a specific minimum portion to be injected by the owner.
Remember, if you have questions about starting or growing a small business in Halton, give us a call at 311 or drop by the Small Business Centre at 1151 Bronte Road in Oakville. You can also check out our upcoming seminars includingSmall Business Financing and Insurance.