A business plan a lender will actually fund

A credit officer has a file to complete and a short list of questions. Answer them in order and the meeting goes differently.

Seven short paragraphs. If any of them needs a second page, you do not know the answer yet.

1. The problem you solve and for whom.
2. The offer and what it costs the customer.
3. Why you: what you have done that makes this likely to work.
4. How customers find you, with a cost for each route.
5. What it takes to deliver: premises, equipment, people, suppliers.
6. The money: what you need, what it buys and what you are putting in.
7. The repayment: from which cash, by when.

A sales forecast you can defend

"The market is worth a billion and we need one percent" is not a forecast. This is: 40 customers in the first month, growing by a stated rate, buying at an average price you can show from quotes, pilot sales or competitors. Every line should be answerable with "because".

Break-even

Break-even revenue is fixed costs divided by your margin. With CAD 180,000 a year of rent, wages and overheads, and CAD 0.65 kept from each dollar of sales after direct costs, you need about CAD 276,923 of sales to cover them. Below that you are funding losses. Know the month you cross it.

Cash is not profit

You pay for stock, deposits and wages before customers pay you. A business can be profitable on paper and unable to make payroll. The cash flow, month by month, shows the lowest point. That number, plus a margin, is what you need to raise.

Our startup financial model does all three from one page of assumptions, and the free 13-week cash flow forecast covers the first quarter in detail.

A lender wants to lend to something that exists. Before the meeting:

• Choose the structure. A sole proprietorship is cheapest to run. A corporation separates the business from you and is taxed at the small business rate on its first CAD 500,000 of active income: 9 percent federally, plus Ontario's rate, which fell from 3.2 to 2.2 percent on 1 July 2026.
• Register the business and get a business number.
• Open the CRA accounts you need: GST/HST once taxable revenue passes CAD 30,000 over four consecutive quarters (or earlier, by choice), payroll if you will have staff, and corporate income tax.
• Open a business bank account and keep it separate from day one.
• Set up the books. A lender will ask for statements every year. It is easier to start right than to rebuild.

We do all of this as one package. See start a business in Canada.

• Your own savings. Expected by every lender. Record it properly as a shareholder loan or share capital.
• Family. Decide whether it is a loan or ownership and put it in writing.
• A bank term loan for equipment and fit-out, repaid over the life of the asset.
• A line of credit for working capital that rises and falls.
• Government-backed small business loans, offered through banks and credit unions for equipment and leasehold improvements.
• Leasing for vehicles and equipment.
• Investors, who take a share of the company instead of repayments.

Match the money to the use. Long-lived assets on a line of credit is the most common way a healthy business runs out of cash.

The loan comes with conditions: statements by a date, ratios to maintain, limits on what you can take out. Put them in the calendar. Compare actual results with the plan every month, using a budget against actual view, and tell the lender early if something moves. A lender who hears bad news from you first is far more flexible than one who finds it in the statements.