There are several factors to consider while launching a new company. How you’ll fund your business is one of the most critical choices you’ll have to make. You have a few choices, each with its own set of advantages and disadvantages.
This article compares Ontario government funding with private finance to help you choose the best option for your company.
Ontario Government Funding
One option for financing your startup is government funding.
The Ontario government, and the federal government of Canada offers a variety of programs and services to help businesses get off the ground. As an example; one such program is the Canadian Youth Business Foundation (CYBF). The CYBF provides financing, mentorship, and resources to young entrepreneurs between the ages of 18-34. They also offer loans of up to $15,000 with favorable interest rates.
Another option is the Scientific Research & Experimental Development Tax Incentive Program (SR&ED), which offers tax breaks to businesses that are engaged in scientific research and development.
However, across Canada, there are more than 1,500 distinct government funding schemes that aid entrepreneurs. Many of these options are applicable to startups in Ontario. The government provides a wide variety of funding opportunities, including gift and loan programs, exemptions, credits, and tax incentives.
In Ontario, you can apply for grants, loans, tax breaks, and credits from the provincial government.
It is crucial to investigate the many funding options available in Ontario
In Ontario and rest of Canada, companies can apply for one of several different forms of government grants, including:
1. Ontario Startup Grants
Companies can use these grants to pay for things like advertising, R&D, and initial capital investments.
2. Ontario Expansion Grants
To encourage firms to grow, the government provides incentives to help with things like expanding their workforce and inventory.
3. Ontario Community Grants
Companies that want to give back to their communities by financial or in-kind donations to nonprofits can apply for these grants.
4. Ontario’s Women in Business Grants
Women-owned enterprises can apply for grants to help with costs like getting started, getting trained, and participating in a mentorship program.
Moreover, it is usually a good idea to educate yourself on the different forms of grants, such as the non repayable grants, partial contusions, etc.
You can review all government grants and funding options in the Funding Database. With currently over 1,500 government funding options, it will allow you to search all funding options in Canada and within Ontario, for your small business.
Businesses can get loans from the government in the form of guaranteed loans and credit lines. These loans can be utilised for a variety of purposes, including start-up fees, expansion, and equipment purchases, and often have cheaper interest rates than loans from a regular bank.
Interest is typically not charged on or charged at very low rates for government loans. More often than not, the repayment terms are also more accommodating than those of a traditional bank loan.
As an added bonus, Ontario small businesses can take advantage of a variety of tax benefits and deductions. Some examples are the Research and Development Tax Credit, which rewards companies for investing in R&D, and the Small Business Deduction, which reduces the tax burden on smaller companies.
Tax breaks and credits can help reduce the amount of taxes you
Private Funding in Ontario
Private finance is an alternative method of securing startup capital. Money can be raised from a variety of sources, including personal connections, financial institutions, angel investors, and venture capital firms.
When you raise money privately, you get to keep running the show. On the flip side, you might have to give up a larger piece of your business. Since your investors are counting on a profit from their initial investment, you’ll be under even more pressure to succeed.
Private funding is useful, but it can be expensive for your company. Most private lenders only care about getting their money back plus interest, whereas government funding possibilities care more about your company’s long-term success (which will benefit the government through more tax revenue, new jobs, etc.).
In the end, it will come down to your individual requirements and circumstances to determine which option is best for you. Both publicly and privately funded projects have their benefits and drawbacks. If you are unsure of the best course of action for your company, it is recommended that you consult an expert.