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Running an Online Store

If you wish to start and run an online business in Canada, you will need to think of products that your business will be offering, select a webhost, have a website created for you, attract customers, and find financing.

Products

There are plenty of products to sell online, for example, e-cigarettes, Bluetooth speakers, LED lighting, denim, baby clothes, etc. Look into market data and statistics to identify trends and ensure that the volume of sales is growing.

Create a Website

The next step is to choose a webhost and register a domain. Check different information management platforms and choose the one that you like best. You will also need an eCommerce platform or shopping cart, and it is best to choose a platform that can be optimized for mobile phones and other devices. Finally, you have to choose a template for your website or ask a website designer to design it for you. You also need content that you either write by yourself or is written by a blogger or content writer that you hire. Quality content is important for search engine optimization so that your website receives traffic from the search engines. High quality content also attracts potential customers.

Business Plan

Your business plan should include sections on the products and services offered, your sales and marketing strategy, market analysis, and your value proposition to explain what your idea is. Make sure you describe the products and services you plan to offer, whether domestic cleaning, financial consulting, online courses, e-books, clothing, or anything else. Many finance providers require that borrowers submit a business plan together with their application.

Find Financing

The amount that you need to start an online business depends on the products you plan to offer, whether physical or digital products, promoting or offering services, etc. There are different options to finance your business in Canada, including peer-to-peer networks, funding by banks and other financial establishments, and government grants and loans (https://www.lifeoncredit.ca/). You may want to check government grants first, and the type of funding available depends on factors such as province or territory of residence, whether you need money for an Aboriginal business, etc. If you live in Montreal, for example, and are under 35 years, then you may qualify for funding in the amount of up to $10,000 of which 70 percent is in the form of a loan and 30 percent in the form of a subsidy. Financing is also provided by non-government organizations such as the Entrepreneur Canada Start-Up Program, which offers funding to entrepreneurs aged 18 to 39 who plan to start a business. Applying for a government loan is yet another option, for example, funding under the Canada Small Business Financing Program. You can use the money to buy used or new equipment. Applicants qualify provided that their annual revenues do not exceed $10 million, and they pay costs such as renewal, set-up, and other lender fees, interest charges, and a registration fee of 2 percent of the loan amount. Loans are also offered based on factors such as location, gender, immigrant status, and purpose. If you are a women entrepreneur in Alberta, for example, you can apply for financing with Alberta Women Entrepreneurs, which is a non-for-profit organization, offering mentoring, funding, and advice. Loans of up to $150,000 are available to obtain operating capital, buy equipment, etc., and borrowers benefit from a low interest rate (prime plus 3 percent). Another option is to apply with a credit union or bank, especially if you are an existing customer (https://www.lifeoncredit.ca/top-6-secured-credit-cards-for-canadians/). You are more likely to be offered flexible repayment terms and a competitive rate.

Peer-to-Peer Lending in Canada

Peer-to-peer financing is an alternative to loans by brick-and-mortar banks and credit unions and is one solution for businesses that are looking for affordable ways to invest and expand. Given the recent interest rate increases, Canadian businesses increasingly turn to peer-to-peer networks and other alternative providers.

Why Businesses Opt for Non-Traditional Financing

One of the main reasons is the fact that credit is less available than a few years ago. This means that small businesses that cannot offer collateral or have no credit history are at a disadvantage when applying with traditional lenders. According to a report by Statistics Canada, some 98 percent of companies are small businesses, and over 80 percent of start-ups resort to non-banking sources of financing, including trade credit from suppliers, savings. Other alternative solutions include equity-based crowdfunding, balance sheet consumer and business lending, and reward-based and donation-based crowdfunding. With technological advancement, including technologies such as artificial intelligence, data analytics, and cloud computing, peer-to-peer networks have also become an alternative source of financing for small businesses.

Peer-to Peer Platforms

Lending Loop is the first peer-to-peer platform in Canada that targets small businesses and advertises flexible repayment, fast approval, and affordable interest rates. Launched in 2015, the platform offers access to loans in the range of $1,000 to $500,000. Over $43 million have been lent by investors to businesses through the platform. The application process is simple and straightforward. The application is available online and is evaluated to ensure that the financing offered meets the requirements of the applicant. The funding is transferred to the borrower’s account upon accepting the offer. When applying, customers are asked to provide information such as annual revenue, years in business, amount required, and type of business, i.e. sole proprietorship, partnership, or corporation. Different types of loans are available, based on the information provided, including express and premium business loans. Borrowers who get financing through the platform usually apply for loans in the range of $75,000 - $100,000 with a term of 1 to 3 years. The average interest rate is at about 12 percent, and rates start at 5.9 percent a year. Given that rates are considerably lower than credit cards, this is an affordable solution for borrowers who are new to credit.

The government of Ontario announced plans to finance up to 10 percent of the loans offered through the platform, amounting to some $30 million. This is a way to support small businesses and offer incentives to expand their operations by increasing the pool of funds available.

Other Platforms

There are other lending platforms in Canada such as Lendful Financial, Borrowell, Lendified, Financeit. Financeit, for example, is a platform founded by Paul Sehr, Michael Garrity, and Casper Wong and is currently owned by Goldman Sachs. It works as a one-stop shop that connects customers and businesses and specializes in loan servicing and origination, collections, and risk adjudication.

Borrowell is another online platform that offers personal loans and free reports and credit scores, helping customers to improve and monitor their score. The platform features mortgages, loans, and credit cards, including rewards, low interest, travel, and cash-back cards. Mortgages are offered to customers who plan to refinance, renew, or purchase a property. Based on their credit score, borrowers are offered access to a list of finance providers that feature mortgage products. Personal loans come with an interest rate that can be as low as 5.99 percent, and the money can be used for big purchases, credit card payments, business expansion, debt consolidation, home improvements, wedding expenses, or anything else. Loans of up to $35,000 are available, and there are no early prepayment fees. Customers are asked to provide information such as their bank account and proof of income. The repayment term can be three or five years, and borrowers pay an origination fee of 1 – 5 percent once their application has been approved.