Ontario is a top province in Canada with 15 million residents – no wonder it’s the business capital of Canada.
The Ontario government funnels money into the economy to help boost entrepreneurship and to ensure that Ontario remains the business hub.
With that in mind, the Ontario government has a number of funding programs that help individuals purchase a small business or a franchise.
These funding programs, often categorizing this type of transaction as business acquisition exist to help Ontario residents; and those coming into Ontario with the purchase of a proven business model such as a franchise; or an existing business that already has traction.
Why, you ask?
Well, the Ontario government provides funding back into the province. Having additional businesses helps stimulate the economy by creating jobs. These jobs, result in additional paid taxes, creating a cycle that helps Ontario thrive.
Ontario funding programs to help with business acquisition
The various Ontario government funding programs that can help with the business acquisition will often come in the form of a government loan. While certain government grants exist, for business or franchise purchases, you are mainly looking at a government loan.
These loans can often be far greater than any business loans via banks or private lenders and can have better conditions and terms – to help you as a new potential business owner to succeed.
So, if you are considering buying a franchise, a Mr. Lube Oil Change Franchise let’s say; you may utilize the government options to help you take over this type of business.
If you are considering buying Joe’s Pizza Shop down the street; you may be in luck and potentially be eligible for a government loan to help with the acquisition.
While not everyone is eligible for a government loan, the more you know about the different types of government funding options in Ontario, the better.
The different types of government loans
When applying for a government loan to purchase a business or a franchise in Ontario, the different options may include; standard government loans that come with low interest or no interest. In addition to that, you may be able to take on a guaranteed government loan, or a conditionally repayable loan.
Each of these government loans comes with different advantages.
Low Interest or No Interest Government Loans
When considering buying a new business or if you want to purchase a franchise in Ontario, a government low interest or no interest loan may be the right option for you.
It is there to help simplify the process of acquiring the business by giving you the needed capital. Unlike a traditional bank loan, these Ontario government loans may be more favorable in terms of interest and repayment options.
Guaranteed Government Loans
The guaranteed government loans are a great way to get the needed capital to buy a business in Ontario. No matter if the business is a proven system such as a franchise, or an already operational small business; a guaranteed loan from the Ontario government may have our back.
The Ontario government or the agency that you are approved for would be the co-signer on your loan. This gives you an extra layer of security and protection with the borrowed funds as it means that the agency may be on the hook for a percentage of the loan if things don’t go as planned.
Certain government-guaranteed loans can cover as much as 85% of the borrowed money.
Conditionally Repayable Loans
Another great funding option to consider when buying a business in Ontario. The conditionally repayable loans will help you as a small business borrow the needed money to startup and launch your business – to start collecting the needed cash flow, allowing you time to pay back the needed loan.
The conditions of these loans are often negotiated based on your needs but can range from long terms loans to no repayment until profitable..etc
No matter the type of funding you decide to apply to remember that the key to any successful funding application is to have a solid business plan in place.
If you are buying a franchise, the funding agencies may be more lenient towards your application as they know that the chances of success with a franchise will be greater. Contacting your franchise to obtain a business plan, projected financials may be helpful so you don’t have to do it all.
If however, they don’t provide this to you, using a tool such as the Business Plan Builder may be of help to get the perfect business plan in place to help you apply for funding.
On the other hand, if you are buying an existing business in Ontario, the process may be the same. Obtain the business plan from the seller; or at the very least the financials to help you do your due diligence, but also use it to apply for any government-related funds to help with the acquisition.
Tips to remember:
To help you obtain the needed funds to assist with the business or franchise acquisition, follow the below tips for improved chances of success with the funding but also with your business takeover:
- Ensure you are not asking for 100% of the funds.
- Don’t assume that the funding agency knows the business or franchise. Have a plan ready.
- Remember that many funding agencies can help you after you take over the business as well; with various expenses that are part of operating the business.
If you need assistance in locating funding options via the Ontario government, speak to an Ontario Startups expert to see how much you may be eligible for to help you take over a business or franchise.