You’ve worked hard and came up with a great idea—now it’s time to find investors to turn that idea into a real business. What options do you have?
Asking your friends and family to invest in your business can be difficult since the odds of an early-stage business succeeding are very low. We’ve all seen the stories.
With no revenue or past results, banks will likely pass. High-interest loans will only strangle your business, making it impossible for you to grow.
So, how can you convince people to become early investors in your business?
The answer is simple. You need to incentivize their investment, which is why the Small Business Venture Capital Program could be the right choice.
Read on to learn why the Small Business Venture Capital Program is one of the best options you have to turn reluctant investors into committed capital.
What is the Small Business Venture Capital Program?
The Small Business Venture Capital Program gives tax credits to investors to incentivize them to invest in small businesses in British Columbia. The program is overseen by the Investment Capital Branch (ICB) of the BC Ministry of Jobs, Trade, and Technology.
The government understands how challenging it is to create and expand a small business. They also know how important small businesses are to the local economy. This program solves the financing challenge by ensuring small businesses have ongoing access to the early-stage venture capital needed to develop, expand, and thrive.
British Columbia investors will receive a 30% tax credit on any investments made through a Venture Capital Corporation (VCC) or Eligible Business Corporation (EBC).
How can you become an Eligible Business Corporation?
While the program is fairly accessible to small businesses in British Columbia, there are a few requirements that must be met.
The first requirement relates to the type of business that you operate. Eligible companies must engage in at least one of the following activities:
- Manufacturing and processing of goods
- Research and development of proprietary technology
- Destination tourism
- Development of interactive digital media products
- Development of clean technology
- Advanced commercialization
And even if you engage in one of the above activities, you still need to meet additional requirements related to your company structure, assets, and other specifications.
Here is a brief breakdown of these requirements:
- The program is only available to BC-based companies. Enrolled businesses must pay at least 75% of their annual wages and salaries to BC employees
- Shares must be held for a minimum of 5 years
- Eligible companies must have less than 100 employees
- Must have raised at least $25k in equity capital
- 80% of the companies assets must be located in BC
Although this program is accessible to any BC-based business that meets the requirements, a large number of applications get rejected due to incomplete information.
If you are interested in taking advantage of this program, you should work with a professional business planning service to ensure your application is completed properly.
Who can qualify to become an accredited investor?
Finding the best financing is one of the biggest challenges small businesses experience. Finding the right investors early on can make or break a company.
The Small Business Venture Capital Program allows accredited investors to receive a tax credit for investing in local, small businesses in BC.
So, what are the requirements to become an accredited investor?
- An individual investor is eligible to invest up to $400,000 per year, while there is no limit for corporations.
- Any tax credits used by individuals are refundable, while those received by corporations are non-refundable.
- The minimum net worth for an accredited investor is $5 million, or a minimum of $200,000/year in earnings over the past two years ($300,000 for a family).
- Tax credits can be carried forward by investors for up to four subsequent years.
Are you looking to take advantage of this program?
There’s never been a better time to get your business the funding it needs to grow. The Small Business Venture Capital Program is a powerful tool for small businesses looking for early-stage capital to finance growth.
If you’re ready to get started, you can start your application to become an EBC here.
