Someone reviewing your loan application is really asking one question: if this goes worse than the owner expects, how does the loan get repaid? The parts of your plan that answer it get read closely. The rest gets skimmed.
Founders tend to write the plan they'd want to read. The vision, the market, why the product is good. Those sections matter. They're just not where a credit analyst spends the time.
So this piece looks at the plan from the lender's side. It covers the four routes most Canadian small businesses look at, what to prepare, and the questions to ask before you start writing.
A boundary first. I write business plans. I don't lend money and I can't tell you whether you'll be approved. Nobody honest can promise that. Decisions depend on your credit, your security, your numbers and the lender's policies at the time. Treat this as general information, not financial, legal or tax advice, and confirm the specifics with the lender and your accountant.
Four routes, and what to confirm with each
| Route | What it is | Confirm with them before you write |
|---|---|---|
| Your bank or credit union | Conventional term loans and lines of credit, under the lender's own credit policy | Their preferred plan format, the owner contribution they expect, security and personal guarantees, and whether they'd consider a CSBFP loan |
| Canada Small Business Financing Program (CSBFP) | A federal program. You borrow from a participating bank, credit union or caisse, and the government shares part of the lender's risk on eligible loans | Current loan limits and eligible costs (both have changed in recent years), the registration fee, the rate the lender will charge, and whether your purchase qualifies |
| BDC | The Business Development Bank of Canada, a federal Crown corporation that lends to businesses and often works alongside private lenders | Which product fits your situation, how much financial history they need, and whether they want their own template or accept yours |
| Futurpreneur | A national non-profit offering startup financing, delivered with BDC, plus a volunteer mentor, for founders aged 18 to 39 | Current loan amounts and eligibility, and their required plan and cash-flow format |
These routes overlap. A CSBFP loan comes through a bank or credit union, and Futurpreneur's financing comes with a BDC component. Ask early how the pieces would fit together for you, because it changes what the plan needs to show.
How a lender reads your plan
Credit people often summarize their thinking as the five Cs: character, capacity, capital, collateral and conditions. Here's roughly the order a plan gets read in, and which C each part answers.
- The ask (capacity). How much, for what, over what term. Put it on page one. If they have to hunt for it, you've made a poor first impression.
- Use of funds (capacity, collateral). A table: each item, its cost, where the figure comes from (quote, invoice, estimate) and how much of it you're covering yourself. "Marketing: $40,000" invites questions. "Google Ads, January to June, $2,000 a month, per the attached plan" answers them.
- Cash flow (capacity). Monthly, for at least the first year. This is where plans get tested. Can the business make its loan payments in its slowest month, not its average one?
- You (character, capital). Your experience in this specific kind of business, your personal financial position, and how much of your own money is going in. Lenders generally want to see the owner sharing the risk.
- Security and guarantees (collateral). What backs the loan. For many small-business loans that includes a personal guarantee. Ask rather than assume.
- Everything else (conditions). Market, competitors, marketing, operations. These get read to check that the assumptions behind your numbers are believable.
What to gather before you start
Your lender may ask for more or less than this. Get their list. As a starting point:
- a personal net worth statement (what you own, what you owe)
- recent Notices of Assessment from the CRA
- financial statements for the last two or three years if the business is already operating, plus year-to-date figures
- quotes for any equipment, vehicles or leasehold improvements you're financing
- the lease, or a letter of intent, for your premises
- a short bio focused on relevant experience
- accounts receivable and payable listings, if you have them
- any licences or permits the business needs to operate
Six mistakes that are easy to fix before you submit
- Projections that don't tie to assumptions. If you forecast strong growth, the plan should show where the extra customers come from and what it costs to win them.
- No seasonality. A landscaping company in Winnipeg doesn't earn the same in February as in June. A forecast built on average months hides exactly the month the lender cares about.
- HST lumped into revenue. If you're registered, you collect GST/HST and remit it later. Put it on its own lines so the cash flow shows when that money actually leaves.
- Loan payments missing from the cash flow. Include principal and interest, starting when they really start.
- No contingency. A modest line for the unexpected shows you've thought about what goes wrong.
- An investor pitch sent to a lender. Investors buy the upside. Lenders care about the downside and repayment. Same business, different emphasis.
Questions to ask your lender first
Before you write anything, get answers to these. They become your brief.
- Do you have a preferred template or required sections?
- How many years of projections do you want, and monthly for how long?
- What owner contribution do you expect for this type of loan?
- What security and guarantees will you need?
- Do you need accountant-prepared financial statements, or will internal ones do?
- Which ratios do you look at (debt service coverage, for example), and what level do you want to see?
- Realistically, how long from submission to a decision?
Can you write it yourself?
Yes, and plenty of owners should, especially for a smaller loan with a bank that already knows them. BDC and Futurpreneur both publish free business plan templates, and AI tools will produce a formatted draft for a few hundred dollars.
What a template can't do is check whether your numbers hold together, or anticipate the questions an analyst will ask about your particular use of funds. If you pay for help, pay for that part.