Raising cash

To take your business to the next level you’ll need money. How you get enough finance to grow is the question – tap into your personal funds, ask family, approach the bank, or search for investors. Below, we discuss the options along with the advantages and disadvantages of each.

Using your own funds

The advantages of investing more of your own money to grow your business (assuming you have the funding available) are clear – you’ll retain ownership and should you need investors to come on board in the future, they’ll appreciate the sweat-equity you’ve put into your business.

Opportunity cost

Disadvantages of self-funding can depend on how your savings could otherwise be used – the opportunity cost. You may have to sacrifice some of your own personal comforts, like a nice car or a new house, to allow more of your own financing to be invested in your business.

Can you increase debt on any of your personal assets like your house? Is there anything you could sell such as a cottage or a vehicle? If you used your own cash now to grow your business rather than borrowing, you just might be better off over the long-term.

Asking family and friends

If you don’t have any savings available to help your business grow, consider asking your family or some close friends next. It’s a bonus if any of them are business-minded because as investors they’ll be motivated advisors.

Family and friends are also likely to be more forgiving than outside investors should your business experience some difficult times.

Maintain healthy relationships

To save any relationships falling apart, it’s important to be upfront with this group of investors. Ensure you:

  • Let them know the risks involved.
  • Show them your business plan.
  • Put their investment in writing, as you would with any outside investment.

Make it clear there’s no guarantee their money will be returned, or that profits are assured.


Do you have spare capital that could be better employed in the business? Many businesses build up cash reserves and there’s little point having it sitting being under used. Could you redirect that capital to improve your capacity?

Approaching the bank

For an established small business that wants to grow, a term loan can often be the best finance a bank can offer. Such a loan would be appropriate if you needed to make major capital improvements, like equipment, computers or a new vehicle.

To secure a term loan, your bank will need a few years of financial information on your business – and probably on yourself too. If you already have a strong relationship with your bank from the early days of your business venture, you’ll be in a better position to receive additional funding.

Take a look at the term loans we offer for businesses.

Credit cards and overdrafts might be other viable alternatives if the financing you need isn’t that major. Take a look at our credit card options.

Seeking investors

By deciding to present your business to investors, you may end up releasing some ownership – it’s something you should take time to consider. Then again, outside stakeholders might be exactly what your business needs to rise to a higher level of success.

Advantages of getting investors on board

There are some valid reasons why using investors could be the way forward for your business, including:

  • Shared risk – money from outside investors will help you minimize your own financial risk.
  • Quantity – investors will be able to contribute larger amounts of capital than you can generate from your own savings.
  • Added value – investors that provide money for your business to grow, also want to see it succeed. They can offer their own expertise, resources and connections.
  • Support – most investors will want to use their professional networks to help your business do well. For example, an investor may introduce you to a major source of new business.

Disadvantages of utilizing investors

Just as inviting investors into your business has its advantages, it also has some disadvantages such as:

  • Shared ownership – investors will typically receive shares in your business, though you’ll want to retain control by having the majority share. Shared ownership means the other investors will have questions about sales, expenses, profits and decisions you may make.
  • Less profit – all investors want to see a return on their investment, so you’ll earn a smaller share of any profits your business makes.
  • Responsibility – you’ll have a responsibility to your investors to repay them, although they’ll also be expecting a return in the form of dividends, interest or increased share value.
Venture capital

If you find your business is growing rapidly, you might consider using venture capital funds to take that next step. Venture capitalists are usually groups of wealthy investors that pool their resources and invest in high risk, high reward business ventures.

They will want a say in your business and may even have an ultimate goal of wanting to sell it in the future to gain their financial returns. However, they may be able to provide large sums of funding that other sources of finance can’t – leaving you with few options if you’re experiencing ultra rapid growth.

If you’re considering venture capital to grow your business, visit Canada’s Venture Capital and Private Equity Association’s website

Take the next step

In person

Find a Small Business Advisor in your area.

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