The BDC is a government lender that steps in when banks won't. It charges higher interest rates and requires you to hire BDC-approved consultants with part of the loan. Try traditional financing or bootstrap first, since a failed BDC loan can hurt your credit even without collateral required.
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Raising money from the BDC. I got a question from one of my YouTube viewers, Juan, who wrote in to say, "I live in Toronto, I went to the BDC," and that stands for Business Development Bank of Canada, and they lend money to startups, they don't ask for collateral, and he wanted my advice on what to do. Do I know about them? Should he work with them or not? This is more of interest to my Canadian audience, but there's implications that'll impact you if you're trying to raise money from anybody. That I'll share in the video. The BDC is a crown corporation. It's started by the government, and they're really trying to be a bank of last resort, a lender of last resort. So they will touch the businesses that banks don't want to touch because it's too risky. I've done a lot of work with the BDC. I didn't raise money myself as an entrepreneur, but when I was in the venture capital business, I partnered up with them a lot. The thing with the BDC is they will usually— two things. One, ask for more. So because they're taking on a riskier project, they're going to take a higher interest rate. So if you can get a loan from a bank or the BDC, I'd go to the bank first because you'll get a better rate. But you may not have an option, and that's what the BDC is there for. If you can't get an option, then you go to the BDC, you pay more. The second thing with the BDC is often they will want you to work with their experts. So part of the money will go towards hiring a consultant to help you with whatever problem you're facing right now. If it's branding or growth or marketing or finance, whatever it is, often they'll recommend that you use one of their experts and their, their third-party to come in and help you, and part of the money that they'll give you is to hire that person. So you have to be okay with that. You have to want to use their expert and, and like them and agree with them and, you know, have a good relationship with them. So those are the two things about the BDC. I would definitely explore the option, but I would back up before that and see, do you really need to raise money? You know, if you're just starting out a business I hate spending money until I'm making money. I always try to find a way to start small, even start with a service, get close to your customers, get to know them, prove that what you have in mind will work, start building something up, and then when you're ready to expand, if you show that you can get some people to pay for this thing, whatever product or service you're selling you didn't mention in your email, prove that it works, go get some customers, Then when you go talk to any kind of financial institution, you're raising marketing capital, you're raising expansion capital. It's a lot easier to get. You'll get way better rates. You'll have people climbing over themselves to work with you, and you won't have to give up as much of your business. So if the only person who's willing to touch you is the BDC right now, who's the lender of last resort, then there may be something wrong with your business. You may want to think about starting up without going into debt, without taking on this startup capital, and building it up from there. Now, if they're not asking for collateral, then there's not as much of a downside, right? If it fails, they're not taking your house, but it's going to be on your record. And the next time you go for capital from any bank, BDC, angel investor, whoever it is, they're going to see that you took out this money and you didn't make it work. So that's the risk. You become harder to work with in the future if this venture doesn't work out. So I'd really focus in on trying to get money, start a service, start small, have a big vision, but start small, get capital in from your customers, keep building it up, and when you're ready to expand, when you've shown that your proof of concept works, then it's going out, talking to the guys— if it's bankers, angel investors, venture capitalists— to really build it up. But you may not even need to get there. There's nothing wrong with bootstrapping a business and taking it up. So those are my thoughts on the BDC. Great potential partner to work with, but I'd really start above that and really look at do you really need to go and get financing or not. Believe. For those of you watching, you like the video, please give it a thumbs up below. And if you have a question about the BDC, about raising capital from banks, about raising capital for your business, or any other question for your company, leave it below. In the comments. I love seeing them come in and I love making video responses for you. Thank you and I'll see you soon.
