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Why is Canada Giving Less Seed Capital to Women, Innovators, and Start-ups?

Although there has been much debate on this topic, there is certainly a good argument to be made that suggests women, innovators and start-ups are being avoided, or at least treated unfairly, by Canadian suppliers of capital (i.e. banks, trust companies, etc…). Referring to the 2007 Survey on Financing Small and Medium Enterprises done by Statistics Canada, this financing gap argument is easily seen in the following segments: Businesses owned by women: Only 62% of businesses owned solely by women have their loan requests authorized. Compare this with businesses owned solely by men, which received authorizations on as many as 88% of their loan requests. Smaller Businesses: Businesses with between 1 and 4 employees had only 86% of their loan requests authorized, while businesses with 100 to 499 had as many as 97% of their loan requests authorized. Innovative Businesses: Businesses with R&D expenditures greater than 20% had only 79% of their loan requests authorized. Non-innovative businesses with no R&D expenditures had as many as 87% of their loan requests authorized. In this day and age, and especially in an economy that is in such need of a kick-start, it is staggering to think that we are still putting hurdles around the segments of the market that could very well lead us into our next growth phase. Entrepreneurs have enough of an upward battle as it is, let alone unfair treatment such as this. We’d love to hear from such entrepreneurs who have experienced these obstacles, to see if we can do something about it! Share...
Debt vs. Equity Finance

Debt vs. Equity Finance

In order to expand your business, it is important to understand the two main financing methods. Equity requires investors while debt, which is familiar to most people, is a temporary loan that needs to be paid back with interest. Equity financing involves bringing in investors who provide capital in exchange for a share of the business. This is the strategy that companies use on the popular TV shows, Dragon’s Den and Shark Tank. Unlike debt financing, you are not required to pay back the loan, even if the company does not make profits. Investors don’t require an immediate return on investment since investors are looking at the big picture of the company. Getting written a check may seem like the perfect solution, but this comes with major strings attached since you no longer retain the exclusive rights to the company. Therefore, you need to split the profits with the venture capitalists. Debt financing involves borrowing money from a financial institution or bank and usually requires good credit. Taking on debt scares many business owners because they fear that they will be unable to repay the debt along with the added on interest. With debt financing, full ownership of the company is still in your hands. Taking on debt can also help with future borrowing since it can build up credit if the payments are made in a timely manner. Unlike equity financing, debt must be repaid at some point. Cash flow is required otherwise the payments pile up and therefore make it harder to repay. If the debt-equity ratio is too high it will push away any future investors...