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Starting a business with no money

Even if you don't have a lot of cash upfront, there are still ways to meet startup business expenses.

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If you want to start a business but have no money available to launch it, hope is not lost. There are several ways to finance a new business and get your career as an entrepreneur off the ground. In this guide, we’ll explore your best options for starting a business when you don’t have money.

How to finance a business

  • Business loan. A business loan is one of the most popular ways to launch a startup and it’s also one of the simplest. You choose your lump sum and desired term, then make monthly payments to repay the capital plus interest. As part of your application, you’ll need to explain what your business is and what you’ll spend the loan on. The lender will then make a decision on whether to grant your loan, based on your perceived ability to pay it back.
  • Business credit card. With a business credit card, there’s no fixed term. You’ll pay monthly interest on whatever you owe. You can order several business credit cards for employees to use. Plus, many of them come with extra perks, such as the ability to earn cashback or air miles. These reward credit cards tend to come with a monthly fee though, plus it’s tough to find credit cards with interest rates as low and borrowing limits as high as a business loan.
  • Business line of credit. This works the same as an overdraft or a credit card in that you only pay interest on what you owe. They tend to have much larger borrowing limits, though.
  • Get funding from investors. This involves convincing investors to buy a share of your company in exchange for a sizeable cash injection. Convincing investors that your business is worth the punt tends to be very difficult. In fact, it can be tough to even get in touch with these high-net-worth individuals.
  • Crowdfunding. This option involves setting a fundraising goal and asking for donations from other people. Most crowdfunders give their investors something in return for their contribution once they reach their fundraising goal. A number of popular crowdfunding websites have launched in recent years, making it easier than ever to spread the word of your campaign.

Compare business loans

Name Product Interest Rate Min. Loan Amount Max. Loan Amount Loan Term Minimum Revenue Min. Credit Score Filter Values
SharpShooter Funding Business Loan
Fee based, Prime pricing starting at 9.00%
$1,000
$300,000
6 months - 5 years
$4,166 /month
500
SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $4,166 in monthly deposits ($50,000/year).
Loans Canada Business Loan
Prime Pricing from 9.00%, Long term financing from Prime + 2.00%
$2,000
$350,000
3 months - 5 years
$4,166 /month
410
Loans Canada connects Canadian small business owners to lenders offering up to $350,000. Borrowers must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).
OnDeck Business Loan
8.00% – 29.00%
$5,000
$300,000
6 - 18 months
$10,000 /month
600
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.
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Compare up to 4 providers

Opening a business bank account

A business bank account basically works like a personal one – the main difference is that it’s dedicated to your business’s finances. You should therefore expect the same features, such as a debit card, the ability to make and receive payments, an overdraft option, a banking app and so on.

How to write a business plan

With most of these finance options, you’ll need to present the lender(s) with a business plan. This helps them get a better idea of how the money will be spent and your ability to pay the loan back on time.

Even when you’re not applying for business finance, it’s a good idea to create a business plan. It helps you to set targets, create a clear direction for your business and spot potential hurdles before they hamper you.

Every business plan should include the following sections.

  • Company overview. This section should include the business name, the business address and the business owner’s name as well as the business type (sole proprietorship, partnership or corporation) and the business registration number.
  • A mission statement. This is a brief explanation of why your business exists and what you hope to achieve in the future.
  • Your target market. Be as specific as you can. Explain why you’ve chosen this market over others.
  • Products and services. This is a full list of what your business offers, an estimate of how much it costs to deliver these products and services plus how much you’ll charge for each of them.
  • Key competitors. Who are your competitors? How does your business differ to theirs? Why should customers choose you over them?
  • Marketing plan. Highlight where and how you’ll market your business. What is your monthly budget for each platform?
  • Financial plan. How much will it cost to launch your business? What do you need to purchase? Also, what are the estimated monthly running costs? What are your monthly sales forecasts (minimum, target and stretch goals)?

It’s a good idea to review and adapt your business plan at least once a quarter.

5 steps to create a winning business plan

How to choose your business type

Your business type determines how much tax you’ll pay on the money you make and how personally liable you’ll be for business debts.

Here are your main options.

  • Sole proprietorship. You’ll continue to pay income tax and other remittances to the government as an individual. You personally will be held liable for business debts or lawsuits against your business.
  • Partnership. This is essentially the same as a sole proprietorship, except profits are shared with your business partner(s). Under a general partnership, each partner is held personally liable. Under Limited Partnerships and Limited Liability Partnerships, only general partners (those who manage the business) are liable, while limited partners (investors) are not.
  • Corporation. Here, your business becomes an entity in its own right and your personal finances are separate from your business finances. In addition to filing your own personal tax return, you’ll also file a separate business tax return. Plus, you’ll have to pay yourself a wage from company profits. You can’t be held personally responsible for business debts and will have reporting and management responsibilities.
  • Cooperative. Cooperatives are best for groups of people who share similar social or economic needs and want to operate a business democratically. In Canada, all cooperatives must be incorporated, either at the federal or provincial level. Cooperatives can be set up as for-profit, not-for-profit or charitable organizations.

How to choose the right business structure for your company

Setting up your business space

The great news for low-budget entrepreneurs is that setting up an online business is incredibly cheap. All you really need is web hosting and a domain name. On top of that, it’s completely free to list your business on social media, Google Maps and most listings websites.

If you think you need a physical business space, investigate whether a virtual office, serviced office or a co-working space can fulfill your needs. These options are far cheaper than traditional office space rental.

Am I ready to employ people?

You might think you’re ready to employ people once you’re too busy to do everything on your own.

However, you should also wait until you can comfortably afford to pay them. That means you could comfortably make payroll for the last few months at least. Running out of cash is one of the most common reasons that start-ups fail and hiring an employee too early puts you at a huge risk of doing that.

Also, being unable to pay your employee will have a huge impact on them and their family. Don’t jump into this decision lightly.

Marketing on a budget

Marketing on a strict budget is a Catch 22 situation.

It costs money to reach a lot of people, but without this reach, how are you supposed to make a profit? The solution is to ensure your business finance includes a large marketing budget. If your marketing strategy is successful, you should be able to scale it and scale your profits. Learn more about marketing plans in this guide.

Learn more about financing a new business

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