Financing

OVERVIEW

The success of your business will depend on having sufficient capital to buy the equipment you need, acquire inventory and pay overhead costs such as rents and salaries. You should also have a large enough reserve fund for extra working capital and to enable you to take advantage of "specials" or survive temporary setbacks.

It is essential to assess the cost of establishing and doing business and determine the capital required before you begin. This is an integral part of the initial business planning process.

Your funding requirements fall into two main categories:

1. Initial costs - land, building, fixtures, machinery, supplies, vehicles, pre-opening expenses and opening inventory;

2. Daily operating costs - rising inventories, payroll, rents, taxes, advertising and accounts receivable.

It is vital to know the total costs involved. You must, therefore, prepare a cash flow forecast, which will give you a reasonably accurate estimate of your cash requirements for the first 12-month period. If you cannot do a cash flow forecast yourself, hire someone to do it for you or use the resources of the Pickering Public Library. This cash-flow forecast is an important part of your written business plan and is required by most financial organizations.

The money you need to operate your business may come from several sources. These will include your own savings and perhaps loans from friends, relatives, investors, chartered banks or the Business Development Bank of Canada (BDC). Other financial assistance may be available through lines of credit from your various suppliers.

The most common source of financing for small business in Canada is the chartered banks. Under their operating terms of reference they can provide short-term loans, long-term mortgage loans or loans against inventory or accounts receivable to provide working capital.

Other leading sources of finance are insurance companies, trust companies, credit unions, commercial credit and acceptance companies, venture capital loan companies and factoring companies.

Leasing may also be considered. The interest rates are relatively high, but payments are totally deductible. Leasing is usually arranged for machinery, vehicles and office equipment, where it is best to avoid heavy capital cost outlays.

At the beginning, the most important financial sources will probably be yourself, friends, relatives, your own employees and suppliers, leases and the banking system.

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FINANCIAL ASSISTANCE CONTACTS

Business Development Bank of Canada
400 Dundas Street West
Whitby, Ontario, L1N 2M7
Tel: (905) 666-6694
Fax: (905) 666-1059
www.bdc.ca

Royal Bank of Canada
1340 Kingston Road, Unit 5
Pickering, Ontario, L1V 3M9
Tel: (905) 839-5152
www.royalbank.ca

Canada/Ontario Business Service Centre (COBSC)
Tel: 1-800-567-2345
Fax: (416) 954-8597
Email: ontario@cbsc.ic.gc.ca
www.cbsc.org/ontario

Business Advisory Centre Durham
McLaughlin Square, Suite 9
50 Richmond Street East
Oshawa, Ontario, L1G 7C7
Tel: (905) 438-4008 or (866) 632-5151
Fax: (905) 438-4009
www.bacd.ca

Bank of Montreal
1298 Kingston Road
Pickering, Ontario, L1V 3M9
Tel: (905) 839-8025
www.bmo.com

Business Improvement Loans (Government of Canada) Small Business Loans Administration
235 Queen Street East, 8th Floor
Ottawa, Ontario, K1A 0H5
Tel: (613) 954-5540
Fax: (613) 952-0290
www.strategis.ic.gc.ca

Canadian Imperial Bank of Commerce CIBC
1895 Glenanna Road
Pickering, Ontario, L1V 7K1
Tel: (905) 839-1198
Fax: (905) 839-7338
www.cibc.com

National Bank of Canada
1848 Liverpool Road
Pickering, Ontario, L1V 1W3
Tel: (905) 831-4140
Fax: (905) 831-9894
www.nbc.ca

TD Bank Pickering Town Centre
1355 Kingston Road
Pickering, Ontario, L1V 1B8
Tel: (905) 831-2873 or 1-800-748-0259
Fax: (905) 420-5164
www.tdbank.ca

Bank of Nova Scotia Pickering Town Centre
1355 Kingston Road
Pickering, Ontario, L1V 1B8
Tel: (905) 420-7550
Fax: (905) 420-4199
www.scotiabank.ca

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