10 ways to finance a startup

The trend appears to be especially attractive for older workers. People over 65 are almost four times more likely to be self-employed than those aged 15 – 64, according to Statistics Canada. And a recent U.S. study found that people over the age of 50 made up 40 per cent of the self-employed population.

But no matter your age, financing a start up can be a challenge. While there are a number of options for finding money, most are generally more appropriate for established companies. But with a little creativity, you can find funding.

Bootstrapping. Pulling yourself by your financial bootstraps means using whatever personal resources you have to move your business to the next level. These methods include personal savings, home-equity loans and credit cards. (It has been reported that Google founders Larry Page and Sergey Brin financed their efforts almost entirely through use of credit cards.)

Using personal financing to get your business off the ground means you'll retain equity and have more freedom to develop the business according to your vision. However, experts advise extreme caution with this approach. If you rack up too much debt and damage your credit rating, it will be difficult to find further funding.

Friends and family. Entrepreneurs often go to relatives, friends and colleagues for financing. While this type of funding is typically informal, it's often wise to put a contract in place to prevent any future misunderstandings.

Banks. Securing a traditional bank loan for a startup can be difficult – typically banks will only finance companies that have been in business for a minimum of two years. Further, they need a tangible asset that can be used as collateral. Startups that use heavy equipment or operate in a manufacturing company building are more likely to get a loan.

Government grants. There are a number of government funding programs available for small business owners, including grants and subsidies, tax breaks and other business advantages like insurance against business risks. (For more information, go to: http://www.grants-loans.org/programs.php.)