Financing is the crucial factor in establishing a business. It will be required to cover costs such as assets (property, vehicles, equipment, furniture, etc.), rent, taxes, salaries, advertising, etc. There are two ways to finance a business:

• Equity financing - a lender makes money available for use in exchange for an ownership share in the business - could be a silent or limited partner or a shareholder
• Debt financing - a lender charges interest for the loan but does not get equity

• What will the loan be used to purchase
• Your amount of equity, investments by partners
• Cash flow forecasts
• Contact names, addresses and telephone numbers for lending institutions and other professionals (lawyers, accountants, etc)
• Your personal net worth statement
• Copies of letters of intent, commitments and potential orders
• Photocopies of your insurance policies, legal agreements and appraisals
• Copies of price lists to support cost and sales estimates
• Any appraisal of fixed assets (property, buildings)

• Character - Do you pay bills? Are you reliable? Can you run the business?
• Credit - Do you have a good credit rating?
• Capacity - Can the business generate enough to pay back the loan?
• Collateral - Do you have things of value which can be used to secure or guarantee a loan?

• Estimated market share
  • A portion of total sales of a product/service in a market area that a competitor has is called a market share
• Sales forecast
  • The starting point for financial projections and the basis of business budgeting. It lists all the products/services for the business and the units of sale.
• Supplies and materials costs
  • The list of all supplies and materials and their cost
• Operating expenses - non-labour and managerial labour
  • Non-labour - overhead costs such as rent, utilities, transportation, etc.
  • Managerial labour - salaries, wages
• Capital equipment
• Star-up expenses
  • All expenses required to have the business ready to operate
• Income and expenses
  • A list of all projected income and expenses
• Cash flow
  • How the money will come in and how it will go out each month - cash receipts and cash disbursements
• The balance sheet
  • Shows the balance between the assets and liabilities of the business along with it's net worth
• Break-even analysis
  • At what point will the business break-even with the money coming in and money going out.
• Sources and uses of financing
  • List of owners, investors and shareholders and the total value of equity, list of lenders, etc. Also list of the uses for the financing such as purchasing land, inventory, operating expenses, etc.