An example of equity financing would be Subordinate Financing from the Business Development Bank of Canada (BDC). Subordinate financing can be seen as a cross between debt and equity financing. As with debt financing, although you require cash flow to pay back the loan, the repayment terms are usually much more flexible than regular debt financing. Available cash flow could be used as repayment instead of the depreciating company assets.

The attribute that subordinate financing shares with equity financing is the fact that the BDC is able to partake in the growth of your company through receiving stock options or royalties. This will be determined by the agreed upon terms between you and the BDC.

Here are some criteria for eligibility for small and medium businesses:
1)    having a strong management team;
2)    show proof of a profitable business;
3)    have excellent financial controls;
4)    able to showcase a competitive advantage.

The only enterprise not eligible for subordinate financing would be start-ups.

Paolo Kalaw's Success Story

When Paolo Kalaw started his company, he aimed to build a network of premium dental laboratories... View Details