In fact, government loans are often better than bank loans. They may be interest-free, or may offer highly competitive rates. (In some cases, your loan may even be considered "non-repayable", which is another way the government says "grant".) Government loans carry additional advantages. They're more likely to be unsecured; that is, you don't need to put up collateral against the loan.

You'll find loans under a variety of programs, directed at different industries, different geographical regions, and even loans directed specifically at women and young entrepreneurs.

For example, the federal Canadian Youth Business Foundation (CYBF) offers start-up loans of up to $15,000, amortized over three to five years, to young people starting a business. Young, in CYBF parlance, means anywhere from 18 to 34 years old. You'll need to complete a viable business plan as part of the program, but that should be top of your to-do list anyway. The program often matches you with an experienced business person who can mentor you during (and after) the start-up phase.

Evan and Erin McAskile's Story

At 27 and 28, they were eligible for a CYBF loan, and the couple received... View Details