Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail/
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels


  This site      Tips


  The Web Google


  Where to Find It

Breaking News
  Home Page

  Report on Business



Read and Win Contest

Print Edition
  Front Page

  Report on Business




  Arts & Entertainment



  Headline Index

 Other Sections

  Births & Deaths






  Facts & Arguments




  Real Estate









  Food & Dining




  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

  Where to Find It
 A quick guide to what's available on the site



  Customer Service

  Help & Contact Us



 Web Site

  E-Mail Newsletters

  Free Headlines

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions

Small Business - A Special Advertising Supplement sponsored by Scotiabank - Monday, October 22, 2001

Where to go when you need money

Monday, October 22, 2001

There are many more options for small businesses to obtain financing than a decade ago. So says Michael Slan, a lawyer and partner at the Toronto law firm of Fogler Rubinoff ( In fact, says Slan, who specializes in corporate finance and advises both lenders and entrepreneurs, "it pays to shop around when looking for financing."

It's also important to fully discuss the impact of interest rates, as well as the length of the loan, on your individual situation. Slan points out, for example, that a longer term for a capital loan could be quite beneficial for an independent business that requires a lot of cash flow for growth. He advises that entrepreneurs research, discuss and evaluate different options that may be offered.

Some options for small business in Canada include:

Banks: Inquire about the Small Business Loan program available to companies -- in most sectors -- with annual gross revenue of less than $5-million. This government-guaranteed loan offers a maximum amount of $250,000. Under the program, authorized lenders can finance up to 90 per cent of the purchase or improvement of fixed assets that fall into a number of categories. However, personal guarantees are limited with this program. Check with your bank for details. In addition, the banks traditionally provide operating lines of credit to finance accounts receivables and inventory.

Business Development Bank of Canada: The BDC offers a wide variety of specialized and flexible financial aid (from loans to venture capital) for commercially viable businesses. Although the bank ( supports all industry sectors, it does place emphasis on knowledge-based and export-based companies. As well, it focuses on the overall strength of the firm -- financial structure, management team and ability to repay. The bank also offers consulting services that can go hand in hand with financing.

Asset-based lenders: Originally a U.S. concept, "asset-based lending" has become a financing option for Canadian entrepreneurs that has grown in popularity during the past decade. Money is lent against a company's current assets, much as a bank lends. However -- and this is what makes it attractive to some entrepreneurs -- the lender allows for much higher leverage than a traditional bank. Still, there is a quid pro quo to this type of lending that should be considered, Slan notes. This type of lender often will manage your cash flow, he says, even to the point of a "lock-box" situation in which your receivables are paid into a bank account over which the lender maintains control.

Mezzanine financing: This isa hybrid type of financing that advances money through term loans. These funds are generally based on cash flow, as opposed to assets. In addition, in many cases, the lender receives an "equity kicker," Slan explains. "These lenders are looking for a total return in the 20-to-30-per-cent range, and they can't get that through interest alone. So they take an equity position to boost their return."

When you are looking for financing, contact your lawyer, accountant or your local Chamber of Commerce or Board of Trade to help direct you to private companies such as asset-based or mezzanine-lending firms.

Venture capital: At one time, this was an option only for companies that required multimillion-dollar financing. Today, many venture-capital firms aim specific programs at small and emerging companies, particularly in the seed-money stage. Understand, however, that you will have to give up some equity to the venture-capital firm and have at least one representative from the firm on your board of directors. (This can be very helpful for the expertise the person brings to the table.) For information on venture-capital firms in Canada, check with your bank -- many offer specialized venture-capital programs through affiliate companies -- or contact the Canadian Venture Capital Association (

Community/regional funds/development corporations: This type of lending was launched with the support of governments and business leaders. Although its terms and conditions vary widely from community to community, this financing can encompass loans, loan guarantees or equity investments. However, remember that the goal of this financing is generally to create or maintain long-term employment in a community.

There are also a number of government/banking programs that target specific geographic regions of Canada. Their criteria vary, but each program is aimed at building employment in a particular area or region. For more information, contact your local economic-development or trade office or banking institution.

With the wide array of financing options today, entrepreneurs can take advantage of many opportunities, Slan says.

"So, whether you are looking for startup or expansion funds, take the time to really inquire -- and then evaluate what is best for your company, for both its short- and long-term growth."

7-Day Site Search

Breaking News

Today's Weather


Michael Posner
Ethnic laugh lines
Jeffrey Simpson
Health care: Do we know better than everyone else?

Paul Knox
The rise of anti-anti-Americanism


Editorial Cartoon

Click here for the Editorial Cartoon

Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page