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The Advantages of Borrowing Money to Start a Business

In News


Small Business Financing Options

 Register a Business in Canada

When it comes to managing your business, one obstacle faced will be a lack of financing to get the business off the ground. Borrowing money can seem discouraging.  No need to worry, there are many options available to businesses other than going to a bank.  Also, you don’t need to borrow a large amount and commit to complicated repayment schedules to keep your finances intact. Your business has many options apart from bank borrowing.  Your business can take advantage of the many financing options that are available to startups companies.





Factoring is also known as accounts receivable financing.  Factoring is when your business sells their invoices or Accounts Receivable to a financial institution for a percentage of their face value that is paid in advance. The factor handles the transaction and charges a small fee for their efforts.

There are many benefits of this type of funding:

  • Benefit of cash advances
  • Convenient since the problems you may have with client payments are dealt with by a third party.
  • More attractive to Investors since they see a quicker return on investment


Personal loans


Using personal loans to fund startup businesses is a positive step towards getting your hands on the money you need as a startup business.  Unsecured personal loans are easier to acquire than business loans, as banks have become more risk averse in lending money.

Personal loans allow more freedom than a private investor because you retain equity, meaning you don’t lose control over the direction of your business.



Private investors


Using Private investors does mean sacrificing equity, but you may gain a valuable business partner and the necessary cash you need without relying on banks and their debt repayment terms. Most private investors have plenty of business experience which is an invaluable asset in the world of business.  Private entrepreneurs have more financial freedom than banks and are willing to invest more if they believe in your company’s profitability.  Private investors make money when your business succeeds, meaning that they are as personally invested in making sure your business thrives as you are.