With no history, no track record, and no revenue, borrowing capital for a startup can sometimes feel like searching for the Holy Grail. Nevertheless, there are options, but they might not be where you expect. Here are three of the most popular:

Friends and Family

Borrowing from friends or family continues to be a very common source of capital for small businesses. Although it might not be the first place business owners look, it’s one of the places where owners (of both startups and established businesses) enjoy a lot of success. Pepperdine University’s Graziadio School of Business publishes their Private Capital Access Index every quarter, and friends and family are continually a source of capital for business owners—outpacing crowdfunding, grants, trade credit, business credit cards, bank loans, online business loans, factoring, merchant cash advances, and equity financing for all but the largest small businesses (those over $6.5 million in revenue).

This option is particularly attractive to small business owners who have access to friends or family members with the resources available for investing. Depending upon the relationship, it can be easier for an early-stage entrepreneur to obtain a loan from a family member or friend compared to a more traditional business loan. If you can demonstrate a viable business and a plan to generate revenue, this type of capital can sometimes come with very low or even no interest.


Crowdfunding has become a popular way to obtain capital to start a new business in recent years. If you can motivate individual members of the crowd through an online crowdfunding portal to contribute to your idea, you can capitalize a new business or a new idea. What’s more, it’s the idea that motivates the crowd, not how many years you’ve been in business or your credit profile.

There are two types of crowdfunding you should be aware of: gift- or donation-based crowdfunding and investment crowdfunding. In exchange for a contribution, the former requires a business owner to offer some type of premium or gift, while the later requires the business owner to offer a small percentage of ownership equity. In Canada, the CSA currently requires the investor to be an accredited investor, though recently finalized rules will open the door further to retail investor participation. In Canada, that requirement doesn’t currently exist.
(Click HERE to read about five types of businesses that could be a good fit for crowdfunding.)

Non-Profit Micro-Lenders

Non-profit micro-lenders focus on small businesses that have the potential to provide an economic impact in the community or businesses that can leverage these small loan amounts into a big impact within their businesses. These micro-loans often include very favorable loan terms along with very low or even no interest, along with advice and mentoring to help business owners build successful businesses. Micro-lenders are found in communities across Canada.

These are three accessible options available to small business owners seeking capital. Finding the right option for your business will depend upon your loan purpose and how much capital you are looking for.

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