What are your financing options?

  • Personal investment – Investing your own money in the form of cash and/or collateral.
  • Love money – Loans from spouses, parents, family, or friends.
  • Venture capital – Organizations/investors that fund higher risk projects expecting high returns. Be prepared to give up some equity in your business to an external party, so be sure to look for investors that bring relevant experience to the table.
  • Angels – Wealthy individuals or retired company executives who invest directly in smaller firms. In turn for risking their money, they reserve the right to supervise the company’s management practices (i.e. Board of directors)
  • Grants and Subsidies – Government provided aid to companies. Help to cover expenses such as advertising, salaries, equipment, etc. Usually conditional funding.
  • Bank Loans / Lines of credit / Mortgages – Most common sources of funding. Shop around and consider payback periods, interest payments and conditional requirements. Note: designed for manufacturing, distribution, services and tourism sectors, not including retail businesses!


  • For new businesses, must be 100% secured with cash deposit or real estate.
  • If you purchase an existing business, the bank considers it a start-up.
  • The bank can release security after 1-2 years of successful operation.

Any financing will require a thorough business plan and financial statements

  • Describe your idea.
  • Describe and emphasize owner work experience and history.
  • Back up with feasibility study.
  • Complete comprehensive financial analysis statements and ratio analysis. Assess your market – What is the industry and where do you fit it?

What a lender is looking for?

Any lender will evaluate a funding request based on the following four factors. Understanding their criteria will help you prepare.

  • Management – Personal Characteristics / history / abilities of owner / operator / experience / industry / personal credit history / previous success in the
  • Earnings / Potential Earnings – If existing business, is it profitable? Is there sufficient cash flow?
  • Investment – How much has the owner / operator invested personally? Investment shows commitment.
  • Security – Does the owner /operator have assets /collateral to back up the loan? May not require 100% security, but it shows stability and previous success.
  • Feasibility – What is your business? Is there a need? How is it justified? Where is your research?
  • Repayment Ability – Debt to Equity = total liabilities / shareholders’ equity (lower ratios preferred by creditors)
    Quick Ratio = quick assets / current liabilities (immediate debt coverage)

Did you know?

If you have gone bankrupt in the last 7 years, a bank will not lend to you.

Restaurants have a higher failure rate – it’s harder for them to get $$$.

How you present yourself & your business will have a strong bearing on how you are treated.

Banks are like franchises – they are proven business systems with history and future.

Banks are like owners with personal equity invested in business – it shows commitment.

You need some cash – 10% at the very minimum

You need a solid business plan.

You need a clean credit history.

You need to present yourself professionally and have done your homework.