Entrepreneurs looking for financing need to think beyond a bank or credit union. The keyword should be geography. Whether your company is in Cape Breton, or Vic toria, there may be government programs designed to boost the local economy by investing in small and mid-sized companies.
Trout River Industries (www.troutriverindustries.ca) in Coleman, P.E.I., reaped the benefits of looking for startup financing close to home. Founded in 2002, the 11-employee company develops and manufactures conveyor-bottom trailers designed to safely unload asphalt and other earthen products.
"We received a loan of close to $100,000 from West Prince Ventures Ltd., the local Community Business Development Corp. (CBDC)," says Matthew Brown, who launched the company with his neighbour Harvey Stewart.
"We are not replacing existing jobs. We are creating new ones in our area, which has typically suffered from high unemployment. This is an area with an agricultural history and dependence on fishing. Development hasn't tended to come to western P.E.I."
In rural Atlantic Canada, there are 41 CBDCs, sponsored by the federal government. "Local decision-making is the cornerstone of the program," says Basil Ryan, chief operating officer for Atlantic Association of CBDCs. "The impact on the community is a prime consideration, along with basic business planning criteria, in the lending decision."
CBDCs are "patient lenders," often funding companies that may not have equity or security, but whose potential success will have a beneficial effect on their area.
Mr. Brown forecasts Trout River Industries, which sells its units throughout Atlantic Canada and has recently broken into the Ontario market, has the potential to ramp up to 16 or 20 employees in the next two years. "We're not talking big numbers in the short term," he admits, "but in a rural area like ours another handful of jobs means a lot."
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Web sites that offer information in both official languages:
- www.strategis.gc.ca/sources: Billed as the Sources of Financing Web site, it provides a lot of listings and links to organizations that offer financing for startup or expansion funds. Sources range from large-scale investments to micro-financing. It is an easy-to-use site that lets you access many geographically specific sources (federal, provincial and municipal). It also provides links to private and private and public initiatives geared to specific communities.
- www.cbsc.org: At the Canada Business Service Centres site, visitors click on a provincial or territorial flag to visit the Canada Business Service Centre in their area. Then they can do a combined search of federal, provincial and/or territorial information. A Talk to Us Live! feature lets visitors talk with a business information officer by phone as they search the Web together. Vistors can search other communities, or provinces, for financing, too. If entrepreneurs are flexible as to where they locate their company it may be easier to secure financing.
- www.communityfutures.ca: The Web site of the Pan Canadian Community Futures Network is a gateway to nearly 300 Community Economic Development Centres across Canada. The site has links to every province and territory. For example, it links to the Community Business Development Corporations in Atlantic Canada and the Community Futures Development Corporations in Western Canada.
My Commentary:
There is more information at the above link. These may be laudable initiatives -- and some probably have been successful, but, from what I have seen as to which companies get government funding--is that the same as tied to government funding?--and what happens to the companies after the money runs out, it seems to me to be ill-advised for government to be involved in this. I have known of one business that replaced another successful business after receiving government largesse – only to have both fail in the end. Another business received financing -- and never set up shop at all. Another business just happened to have an owner with strong Liberal ties – which brings one to the question of whether politics plays a part in who gets funding. And just how does the government pick the winners from the losers – and why should it? Should it not be left to the market to decide? NJC
