How to access a $15,000 federal loan
Futurpreneur Canada is the only national, non-proﬁt organization that provides ﬁnancing, mentoring and support tools to aspiring business owners aged 18-39. So if you’re launching, mentoring or becoming a partner in a start-up, you could access a loan of $15,000 to start or buy a business. To be eligible, you’ll need to first create a solid business plan for a business that’ll employ you full-time, and second, work with a mentor for two years. If you qualify, you can also apply for an extra $30,000 through the Futurpreneur Canada-BDC Start-Up Program.
General eligibility criteria
- Demonstrate some training/experience related to your business idea.
- Create full-time sustainable employment for the applicant(s).
- Agree to work with a mentor for up to two years (4-5 hours per month).
- Produce a complete and viable business plan by the end of the application process.
- Have a business that’s been fully operating for fewer than 12 months.
- Assure that the business is not in the research and development stage.
- Assure that financing proceeds may not be used for refinancing existing debt.
A complete list of eligibility criteria can be found on the Futurpreneur website at futurpreneur.ca
Futurpreneur has three distinct areas of assistance – financing, mentoring and partnering.
Financing. Futurepreneur partnering with the Business Development Bank of Canada (BDC) offers collateral-free loans at what it advertises as “better interest rates than most banks.” Specifically, the repayment terms and fees for the Futurpreneur portion of the loan are:
- Up to $15,000 with a term over five years.
- Interest is charged at CIBC’s prime rate + 4%.
- Interest-only payments for the first year.
- Principal repayments are made in equal monthly installments together with interest, over the next four years.
- No penalty for early repayment.
- A $15 program fee charged monthly for the duration of the loan, added to the monthly repayment installments.
- A $50 fee at the time of disbursement.
Amounts over $15,000 are covered by the BDC. BDC’s repayment terms and fees are:
- Interest-only repayment in the first year.
- The interest charged is the BDC Floating Base Rate + 5%.
- Repayment of outstanding BDC principal by monthly repayment schedule similar to your Futurpreneur Canada loan. You may prepay all or any part of the outstanding principal, however, BDC must receive the interest owing to the time of repayment, together with an indemnity equal to three months’ interest on the principal pre-paid.
- Once a year (non-cumulative) on the anniversary date of the loan authorization date, you may repay 15% of the principal outstanding without indemnity.
- BDC charges a $50 processing fee, which is deducted from the initial loan disbursement.
- Applications are subject to BDC approval and eligibility criteria. Some restrictions may apply.
Mentoring. Futurpreneur offers expertise, resources and skill-building opportunities to take you and your business to the next level. Advantages of the mentoring program include:
- Gaining insight and perspective by having someone to bounce your ideas off of.
- Identifying opportunities and risks by learning from someone experienced.
- Enabling you to focus on and strategically work towards your business vision.
- Enabling you to grow your own business network and enhance your business acumen.
- Shortening your learning curve. Building your confidence knowing you have someone in your corner.
Partnering. You and your business can become a partner to Futurpreneur. You can join the impressive list of businesses that donate funding to Futurpreneur, or you can volunteer to be a part of the program, and, you can also donate in-kind support to the program. Strategic partners include universities, industry partners, and industry associations.
How to apply. The first thing you need is a business plan. Futurpreneur provides sample business plans on its website. In this column in the July 2014 issue, we discussed how to build an effective business plan. You can find business plan development templates and guidelines on our website at teegerschiller.com/WhatWeDoFS_Business_Plan.htm . You’ll also need to provide your business registration, license or incorporation documents, partnership or shareholder agreements, etc. A detailed list, along with an online application can be found at futurpreneur.ca.