Obtaining business financing – 5 things you need to know

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Have you heard the expression, “It takes money to make money?”

Whether your business is in the startup or growth phase, you need to invest to bring a project to life, develop a product, or deliver services. 

Your investment can take different forms, whether in the hours that go into developing a product or service or taking part in networking activities, in purchasing equipment or raw materials, or, of course, in cash.

From the outset, you need to be convinced that this investment will let you achieve your ambitions.

Then you will need to convince lenders. Does that idea make you uneasy? There is a lot of paperwork involved, and a business plan and projected financial statements to present. Do you feel like you don’t know where to start? It is better to see your need for financing as an opportunity to validate your project’s feasibility. I like to see it as an acid test!

Keep in mind that you are the main person investing in and managing the project. You are the person risking the most. If you think about it, it is cheaper to correct course on paper than in real life.

So, how do you effectively prepare an application for financing?

I suggest you use the method I have developed to optimize your impact and achieve your goal: “CEFOR.” What’s CEFOR? It is the 5 essential factors to better sell your project and present your application for financing: Credibility, Engagement, Facts, Organization, Risk.


This refers to your credibility as an entrepreneur. The most important component of this project is you. 

Would you give a $10,000 loan to a stranger who simply says, “Trust me. I’ll pay you back in 5 years with interest.” Not likely, right?

Every potential lender and investor asks themselves the following questions: Who is at the helm? Do they know how to steer the ship? Am I confident they will reach the right port? Do I want to do business with them for 3, 5, or even 10 years?

Your lender has to quickly gain confidence in your abilities.

It is therefore essential that you showcase your skills, expertise, and work experience as they relate to your business plan. These factors will confirm to potential backers that you have the tools and the skills to see the project to fruition. 

I strongly advise authenticity. Financers will undoubtedly identify shortcomings in production, sales, or management. Show foresight by presenting possible ways to address them.


You want to show your financial backer your engagement in this project. How do you do that?

1. The “Why” of your business project

All businesses produce and sell something. Explain what is motivating and inspiring you to take the risk with this project. 

Your service or product is just one way to realize the reason you embarked on this adventure.

There is no need for long explanations. Keep it brief and impactful.

2. Your engagement in time and money

It is important to position yourself in the project and identify your day-to-day role in the business. Talk about how you will bring to life the “why,” the purpose of your business, and your contribution to operations.

A crucial factor remains: seed money. Be realistic: no one should invest more than you. Your time, work, and energy are essential to your project. But your personal financial contribution is also essential. Lenders will not want to be the only ones taking a financial risk.

You should take into consideration that the personal investment your financial backers will ask of you can vary between 5% and 40%, depending on the project and the financial partners.

3. The partners in your project

By this, I mean pre-orders, sales, subsidies from agencies, grants, and financing. This indicates to financiers that your project has been assessed and deemed of interest, and most likely viable, by a number of people. This commitment from third parties is a plus, a form of assurance. Don’t forget to talk about them.


Investments are based on a rational analysis of the project. This therefore requires written, structured documents that show the project’s potential and probability of success.

In general, this means the following documents:

  • Business model outline
  • Executive summary – 2-page summary of the project
  • Business, growth, or acquisition plan 
  • Financial statements (growth and acquisition)
  • Market test and study
  • Sales and purchase orders
  • Patents
  • Permits, if required
  • C.V.s of shareholders and management

A friendly reminder: Be concise, precise and stick to the facts. Present evidence and use references.

Remember: The people who will analyze your documents are managers and financial analysts, but not specialists in your field. Be sure they understand you.


The quality of your documents demonstrates your sense of organization, and, by extension, your management abilities. This is something financial backers want to see.

Your financial forecasts also show your sense of organization. Many entrepreneurs neglect or underestimate this factor. Yet, these documents put into numbers what you plan to accomplish with your business.

You invest a lot in your business, and I think you should know whether it will be profitable, when, and at what cost.

To answer these questions, financial forecasts for 2 or 3 years are your foundation:

  • Cost of the project and forecast financing
  • Cash budget (cash flow)
  • Earnings statement
  • Balance sheet

To produce accurate forecasts, you need to be consistent, stick to the facts, and be realistic based on the plan and documents you have presented. Here are a few suggestions:

  • Bids to substantiate the project cost 
  • Letter of intent from potential financial backers
  • Proof of the capital outlay
  • Sales assumptions by product or service
  • Price research for current expenditures
  • Current salary of shareholders

Key point: Will the business be able to repay loans? 

You should do everything you can to determine this before going into business and requesting financing.


Before making a decision, financial backers will analyze the project risk. To do this, they evaluate 3 factors:

1. The profiles of shareholders and management

They base their decision on answers to questions in the above categories: Credibility and Engagement

2. The project

In part, they evaluate the business model, field of activity, competition, and consistency of the application with financial forecasts as described in:

Facts and Organization

3. The financial capacity of shareholders

This factor is decisive because it shows how you manage your personal finances. For a financial backer, your personal credit behaviour suggests how will you manage your business.

They assess:

  • The personal credit rating of shareholders (Equifax or TransUnion)
  • Their personal financial balance sheet (Assets/Liabilities + Net Worth)
  • The ability to reinject cash into the project
Some tips:
  • Check your credit rating before asking for financing so you can discuss with your financial advisor the minimum rating required.
  • Be sure to clean up your personal finances before asking for financing.
  • Be prepared to offer personal guarantees, because you are the driver and main investor in the project.

Obtaining financing may seem like a difficult task but remember that the preparation will serve to ensure the investment you are making lives up to your expectations.

There are many ways to be in business. I encourage you to find the best option for you, based on your current reality, to accomplish your “Why.”

My final piece of advice: Don’t neglect the compatibility factor with financial partners. This is often neglected in the business literature, probably because it is less rational and can generate contradictory emotions. But in business, as in life, everything comes down to personal relationships. 

I strongly recommend you take time in choosing your financial backer. It is better to surround yourself with people who respect you enough to tell it like it is, which can be a major contributor to you succeeding despite obstacles, which are inevitable in business. When you come right down to it, your financial backer is your ally.

Inspiration and bibliography:

Comment préparer une demande de financement 

Comment rédiger une demande de prêt commercial convaincante

8 astuces pour convaincre votre banquier que vous méritez ce prêt

5 éléments pour bien préparer votre demande de financement

8 sources de financement pour votre entreprise

Trucs et astuces pour financer son démarrage d’entreprise

5 règles d’or pour présenter un bon pitch

Comment augmenter ses chances d’être financé par la banque

4 facteurs pouvant affecter le financement de votre projet de démarrage

De l’art de vendre son projet

Comment bien vendre son « business case »

Qu’est-ce qui intéresse le banquier?

Six critères d’évaluation d’une demande de financement

Comment une banque examine votre entreprise