Startup Funding for Young Entrepreneurs in Canada
Look first to Futurpreneur Canada
If you’re young and want to start a business, it can be tough to find the money you need to turn your vision into reality. The standard commercial banks generally aren’t interested in loaning money to people with little or no collateral, business grants are few and far between in Canada, and crowdfunding isn’t a good solution for everyone.
However, if you’re 18 to 39 years old and want to start a business in Canada, there is a great place to look for funding. Futurpreneur Canada, the main source of youth-specific small business funding in Canada, is a nonprofit organization that provides money, mentoring, and support to aspiring business owners aged 18 to 39.
Budding entrepreneurs who qualify can receive up to $60,000 in small business financing through Futurpreneur Canada and its partner, the Business Development Bank of Canada (BDC). Beyond the funding, though, what makes this organization truly outstanding is its commitment to mentoring. Successful applicants can receive up to two years of mentoring through Futurpreneur’s network of entrepreneurs, mentors, and business experts from across Canada.
Financing With Mentoring
Futurpreneur’s general program for 18-to-39-year-olds who want to start a business provides financing of up to $60,000 and two years of mentoring. These are collateral-free loans with comparatively good interest rates, plus you get the benefit of mentoring as you launch your business.
If you're receiving the full $60,000, you'll get $20,000 from Futurpreneur Canada and $40,000 from the BDC. Each of these sources has its own interest rates, fees, and terms, so be sure to familiarize yourself with these on Futurpreneur's website.
If you want to prepay part or all of your loan, you can. There are no penalties for repayment through Futurepreneur, and you're allowed to repay up to 15% of the outstanding principal on your BDC loan each year. The BDC also allows you to prepay more than this, but you'll have to pay the interest owed at the time of repayment, together with an indemnity equal to three months’ interest on the principal prepaid.
Two Years of Mentoring Is Included
The biggest problem young entrepreneurs face isn’t finding financing, though; it’s having the expertise to execute their business idea successfully. Being a successful entrepreneur involves so many skills and so much knowledge, and so few of us have it all in one package.
Nor do most of us start out with an extensive network of individuals who have already made their mark in our chosen industry—those who have “been there and done that” and can provide guidance and inspiration. Having a good mentor automatically increases your new business’s chances for success, so much so that it's worth taking Futurpreneur's mentoring program even if you don't need any funding.
What You Need to Apply for Funding
Besides being the right age, you must also be a Canadian citizen or a landed immigrant and have a business that is fully operating for less than a year.
Your proposed business needs to create full-time sustainable employment for you and any other applicants, and it must be suitable for government funding (i.e., not sexually exploitive or illegal). You do not need to have a fully developed business plan before you apply for funding, but you will need to have one by the end of the application process.
You must also:
- Demonstrate some training/experience related to your business idea
- Agree to work with a mentor for up to two years (four to five hours a month)
- Agree to complete Futurpreneur Canada status updates every month
- Agree to provide authorization for Futurpreneur Canada to carry out a credit check
- Supply two personal references
- Assure that the business is NOT in the research and development stage
- Assure that financing proceeds may not be used for refinancing existing debt.
- Demonstrate that you have been discharged from bankruptcy for at least five years or one year after receipt of a Certificate of Full Performance in the case of a Consumer Proposal.
You can apply for the program at any time of year.
Special Funding Programs for Young Entrepreneurs
Futurpreneur Canada also offers several specialized startup funding programs for young entrepreneurs, including those for:
- Newcomers to Canada
- People who are current students
- People starting or currently working in a nonprofit organization