It’s no secret that raising money for startups will be challenging right now. It seems like everyone is still panicking or are extra cautious when it comes to investing. It is important to avoid having to halt operations wherever possible. We also need to remember that there are still some funding options available out there that could help you. These are a few things we recommend for you to explore:
1. Interest-Free Loans: The government announced $40,000 loans from banks that will be interest-free for the first year. Loans will be available for businesses with payrolls of less than $1 million. The loans will be guaranteed by the government and around $10,000 of those loans may also be forgivable for qualifying businesses. Click here to learn more about this via BDC.
2. Defer tax filing: Businesses can defer the payment of any income tax amounts that become owing on or after today and before September 2020. The government will defer GST, HST, and customs duties until June 30, 2020.
3. Small Business Loan: Low-interest loans up to $2 million if your business has been generating revenues for at least 24 months.
4. Talk to your Bank: Canada’s 6 largest banks (BMO, CIBC, RBC, NBC, Scotia and TD) have agreed to do their part to help personal and small businesses. This support includes up to a 6 month deferral on mortgage payments, as well as other relief on debt payments. That being said, this is very much of a case by case situation, and we recommend that you contact your bank directly to explore your options.
5. Note Payroll Support: Through Canada Emergency Response Benefit (CERB), there will be a 75% Wage Subsidy for qualifying businesses, and it will be back dated to March 15, 2020. In other words, the government will subsidize 75 % of employees’ salaries to avoid layoffs. This applies if layoffs already occurred. This is a $2000 taxable benefit.
6. Keep Exploring: There are alternatives out there to consider in your financing. One popular example for e-commerce startups is Clearbanc. In a high level overview, Clearbanc lends businesses money and get paid back based on sales the business generates, with a fee on top.
In addition, there are private grant programs out there, such as the Facebook Small Business Grants Program. You can also stay up-to-date with a list of active funders in Canada by clicking here.
The content of this article is written for general information purposes only, and does not constitute specific legal advice. This article should not be used as a substitute for competent legal advice from a licensed lawyer.