Financing your first business in Canada can be quite challenging, especially if you don’t know how to get started. But you will be glad to know that there a multiple grants, loans, and government-backed programs that allow access to sufficient capital to cover startup costs and initial operations. And as a first time business owner, you also have the option of combining small grants, low-interest loans, and mentorship programs to help reduce the risks and improve success rates. The key here is to understand all the available options and their eligibility requirements.
Why is the government offering financing options?
To keep the Canadian economy going, the Canadian government and local authorities decided to heavily support entrepreneurs who will be the next job creators. The main goal of these programs is to make it easier for new businesses to get started and give them what they need to stick around for the long haul.
Why the sudden demand?
All of this can be attributed to:
- Increasing numbers of first-time entrepreneurs are looking for low-risk funding.
- Regional programs targeting youth, newcomers, and underrepresented founders.
- Rising interest in small business ownership and self-employment.
- Support for innovation, equipment upgrades, and operational scaling.
Top government grants to start your first business
Government grants provide funding without the hassle of repayment. This has been immensely helpful for founders looking to cover startup costs while building skills.
$5,000 grant for Ontario entrepreneurs
- Access training, mentoring, and funding for starting, expanding, or buying a small business.
- You must contribute at least 25% of the grant amount in cash or kind.
- Eligibility: 18+, Canadian citizen or permanent resident, Ontario resident.
- Must not be enrolled in full-time school.
Use this grant to:
- Get 1-on-1 guidance from experienced mentors.
- Participate in workshops, seminars, and other exciting networking events.
- Learn all about budgeting, business planning, and marketing campaigns.
- Receive mentorship for starting, expanding, or buying a small business.
Low interest loans for first-time entrepreneurs
Low-interest loans are agreat way to provide access to capital with manageable repayment terms. These loans are suitable for founders unable to secure more general forms of business financing from the bank.
$10,000 low-interest loan
- Maximum loan: $10,000
- Average initial loan: $4,000
- Average term: 3 year with 30-day deferral
- Eligibility: Motivated entrepreneur, self-identitfy as having experienced mental health or addiction challenges, Canadian citizen or permanent resident, not in bankruptcy, and must reside in Canada.
You can use this loan to
- Review and improve your business plan
- Access resources to develop financial management and operational skills
- Connect with a mentor for guidance on business growth
Types of small business loans
- No-interest loans: Repayable contributions without interest.
- Low-interest loans: Repayable loans at below-market interest rates
- Conditionally repayable loans: Loans with repayment linked to project success
- Guaranteed loans: Loans backed by the government to share risk with lenders.
Larger financing options for growing businesses
Once your business has started to get traction, you will need additional financing to help you scale your operations. Also, funds are needed for equipment upgrades or investment in marketing campaigns. Once the business has grown enough, there will be plenty of room to spend and improve. Here are some great options to secure your funds.
$100,000 business loan
- Minimum: $10,000, Maximum: $100,000
- Repayment: 5 years, principal can be deferred for 6 months
- Eligibility: Canadian citizen or PR, must have a registered business for 24+ months with good personal credit.
Use this loan to
- Buy equipment, hardware, software
- Upgrade your website and marketing campaigns
- Hire consultants or pay suppliers, landlords, and employees
Buy a franchise for $250,000
- Maximum loan: $250,000, principal deferment of up to 12 months
- Eligibility: Canadian resident, business operating for at least 12 month, good personal credit.
Use this financing to
- Purchase franchise assets and pay startup fees
- Replenish working capital spent of startup costs
- Invest in marketing, websites, or advisory services
Wage subsidies and working capital support
Wage subsidies reduce labor costs when hiring students or new employees for work-integrated learning programs.
Wage subsidy program
- Covers up to 70% of eligible costs, up to $7,000
- Eligibility: Registered Canadian business or not-for-profit
- Funding applies to all industry sectors across Canada
Use this to
- Reduce initial staffing expenses
- Hire skilled students or interns for operational support
- Improve team capacity without increasing early-stage debt
How to access and use financing effectively
Securing funding requires planning, documentation, and understanding program-specific rules.
Key steps to follow:
- Prepare a clear business plan with revenue projections.
- Identify grants, loans, and subsidies that fit your business profile.
- Check eligibility criteria for each program.
- Apply through official channels and provide all required documents.
- Use funds responsibly, track expenses, and follow reporting requirements.
Important considerations
- Government contributions may not cover all costs.
- Funds are often reimbursed after submission of expenses.
- Competition for grants and loans can be high.
- Due diligence ensures public funds are used effectively.
Quick glance at all the options
| Funding Option | Amount (CAD) | Eligibility | Use of Funds |
| $5,000 Grant for Ontario Entrepreneurs | Up to $5,000 | 18+, Ontario resident, Canadian citizen or PR, not enrolled in full-time school, must contribute 25% of grant in cash or in-kind | 1-on-1 mentoring, business workshops, writing business plan, budgeting, marketing campaigns |
| $10,000 Low-Interest Loan | Up to $10,000 (average initial loan $4,000) | Self-identify as having experienced mental health/addiction challenges, Canadian citizen or PR, unable to access traditional bank financing, not in bankruptcy | Review and improve business plan, financial management training, mentorship, launch or grow small business |
| No-Interest Loans | Varies by program | Canadian resident, program-specific criteria | Launch or expand business with repayable contributions without interest |
| Low-Interest Loans | Varies by program | Canadian resident, program-specific criteria | Operational expenses, working capital, equipment, marketing at below-market interest rates |
| Conditionally Repayable Loans | Varies by program | Canadian resident, project-specific criteria | Project-based financing where repayment depends on project success |
| Guaranteed Loans (CSBFL, Export Guarantee Program) | Up to $1,000,000 | Canadian resident, approved by financial institution | Purchase or improve real property, equipment, leasehold improvements, working capital |
| $100,000 Business Loan for Existing Businesses | $10,000 – $100,000 | Canadian citizen or PR, registered business for 24+ months, good personal credit | Purchase equipment, upgrade website/software, marketing, hire consultants, pay suppliers, rent, and employees |
| Buy a Franchise Loan | Up to $250,000 | Canadian resident or PR, business operating at least 12 months, good personal credit | Purchase franchise assets, pay startup fees, replenish working capital, invest in marketing and advisory services |
| Wage Subsidy (Work-Integrated Learning) | Up to $7,000 | Registered Canadian business or not-for-profit | Cover up to 70% of eligible wages when hiring students/interns for operational support |
Frequently asked questions
Can I apply for funding if I have no prior business experience?
Certainly. Most government grants and low-interest loan programs are geared towards first-time entrepreneurs. These also include mentorship and training programs along with funding to help you develop skills in business planning, budgeting, and marketing.
What credit or financial history do I need for a loan?
It depends on the program. Guaranteed loans and standard bank loans typically require good personal credit. Some government low-interest or conditionally repayable loans have more flexible criteria but may consider financial stability and past bankruptcies.
What are the risks of government funding?
Although grants and low-interest loans may bring some financial benefits, there are also some trade-offs. The approval processes are competitive, money is usually limited to specific projects, you may have to submit reimbursement claims, and the checking will be very thorough because it is the money of the taxpayers.
How long does it take to get funding?
Generally, applications for government grants and subsidies, as well as requests for reviews, take from several weeks to months. A loan through a bank or a guaranteed program can be ready within 1-2 weeks after submission of your business plan and financial documents, provided the lender is ready.
Should you finance your first business in Canada?
Yes. The combination of grants, loans, and subsidies makes Canada a supportive environment for first-time entrepreneurs. If you figure out the expenses thoroughly, come up with a convincing business plan, and aim at the right programs, you will be able to get a grant with a low risk of loss.
Ideal application profile:
- Access to $5k–$25k in startup capital
- Prepared to develop operational and financial management skills
- Open to mentorship and networking opportunities
- Interested in building a sustainable small business
Ready to explore your options?
Contact your local Small Business Enterprise Centre or our financial advisor to identify grants, loans, and programs suitable for your region and business type. Use our tools to forecast cash flow and plan repayments. With the right strategy, financing your first business in Canada is achievable and sustainable.
About the author
We are a team of business analysts specializing in Canadian service industry profitability. With 10+ years of analyzing business operations, we have helped dozens of entrepreneurs evaluate and finance business investment opportunities across Canada.
