Canada: The Right Fit: Finding The Ideal Funding Mix For Your Growth Goals

Strategies on enabling growth and expansion

As a private business owner, you're faced with a multitude of growth opportunities. The challenge lies in selecting those that best fit your business. Whether you're intending to pursue product expansion, new customer acquisition or market growth, the challenge isn't uncovering new ways to grow—it's prioritizing the options in front of you and appropriately funding each option to turn them into reality.

While this is undoubtedly a good problem to have, setting the groundwork for sustainable growth requires its fair share of work.

"Most private business owners discover early on that due to limited access to capital—not to mention other resources such as labour and technology, for example—taking on everything at once is difficult, if not impossible," says Kevin Fraser, Partner, Corporate Finance. "This is when it becomes apparent that a clear growth strategy is a necessity."

This article will assist you in establishing a foundation to enable growth and expansion by helping you determine your company's ideal growth opportunities, identify and access the right funding mix and partner to achieve your goals.

STEP 1: Clarify your growth goals

Establishing clear growth goals is an essential first step for private business owners who are setting the stage for growth and expansion.

Through the use of the proper metrics, information and processes, you and your team of advisors can identify the most attractive growth opportunities, assess which investments are likely to deliver the best return and help answer difficult questions— something potential lenders will appreciate.

For example, if you plan to expand to a new market, which markets will you target? If you're looking for new customers, which customers are optimal? What are the risks associated with going after a customer in a different vertical—and how do they compare to the potential rewards? What is the potential payback of an investment in a new piece of equipment, a physical expansion or an IT system upgrade?

"A sound growth strategy offers you the necessary foresight to know where your company is headed, so that you can prepare accordingly," says Kevin Fraser, Partner, Corporate Finance. "By identifying your funding needs early on, you can also position your business in such a way that you can access the most appropriate funding sources when you need them."

While there are numerous ways for a business to grow, the three primary avenues of growth include:

  1. organic growth realized through market expansion, new customer acquisition, productivity improvements and operational efficiencies;
  2. capital-funded growth, which includes expansion into new markets, developing new products, attracting new customers and/ or investing in new locations, technologies, equipment or skilled workers; and
  3. acquisitions, which involve the purchase of a competitor or complementary business.

If capital-funded growth emerges as one of your top growth goals, the earlier you can define your capital requirements, the easier it will be to identify the optimal funding source(s). With the right information in hand, you'll not only be able to clearly define your capital needs but identify your ideal funding partner(s) as well.

STEP 2: Identify your optimal funding sources

Given the current strong lending environment, many businesses opt for debt financing when funding expansion. Senior debt is readily available for strong performers at historically low interest rates, which bodes well for today's borrowers.

Yet, while you may have a strong relationship with your lender, debt is not your only option—and, depending on your objective, it may not be your best. There are plenty of financing alternatives out there, from subordinate debt financing to private equity and everything in between.

"In recent years, private equity financing has become increasingly available to smaller businesses in Canada," says Jeff Pocock, National Leader, Private Equity. "Keep in mind, however, that each funding source comes with its own cost, structure and lending preferences, so finding the right one for your growth objective—and your business—is integral to the success of your expansion."

The financing you choose will depend, firstly, on the type of investment for which it is required. If it's something that is unlikely to generate positive criteria of traditional funding sources. You must also consider your personal preferences—how comfortable are you with taking on debt?—as well as the specific situation. When it comes to capital structure, there's no one-size-fits-all approach— sometimes a combination of traditional senior debt, subordinate debt or even a new equity partner will make sense for a specific deal at a specific time.

While you ideally want to pursue the most cost effective sources of capital first, it's important to remember that you can put your business in a precarious position if you don't appropriately manage the expectations of your financial partners. Sometimes, a more patient source of capital will afford you the flexibility you require—and better fit your needs.

How are you growing?

To avoid surprises, business owners should determine answers to these questions:

  • What are our growth goals?
  • What is our strategy to achieve these goals?
  • How much capital will we need?
  • When will we need this capital?
  • What type of capital will we require?
  • Do we have access to this capital?
  • What is the return on capital employed for each growth option?

STEP 3: Set yourself up for success

Like all business owners, capital providers are searching for financial opportunities that will allow them to meet their goals while minimizing their risk exposure. Understanding this is an integral part of successfully pursuing—and obtaining—capital.

That's why, when it comes to interacting with lenders, appearances matter. You need to dress the part—in the sense that your business has to look its best—for capital providers to offer you the funding you need. A well-presented and supportable financing proposal is the key to a stellar first impression.

This document must provide a comprehensive summary of the business, including sufficient historical and projected financial information. "Often, private business owners benefit from calling in external advisors in this situation. After all, when a financing proposal is properly prepared and presented, businesses reap the benefits in the form of improved pricing, relaxed security requirements, flexible financial covenants, reduced personal guarantees, minimal lender fees and more patient reporting requirements—to name just a few," says Jeff Pocock.

A comprehensive financial forecast is another important component of your financing package. This forecast should outline your company's capacity to repay debt according to a potential lender's terms and conditions. It should offer a detailed description of key assumptions on which it is made, and have the ability to be adapted to different financial scenarios. Sometimes a lender may request a more sophisticated financial model to support the financial forecast, the purpose of which is to arm the lender with as much information as possible so it can offer a flexible payment schedule and covenant package, avoid surprises and better assist you during potential cash "stress points".

Moving forward

The earlier you can articulate your business's strategy for growth and expansion, the earlier you can start executing it. Such a roadmap helps point your company in the right direction, define your ideal growth opportunities and narrow down the type of financing that best meets the needs of the business.

Whether you have someone internally to navigate the complex terrain of capital funding, or opt to reach out externally to leverage the services of an experienced advisor, your goal should be to equip your business with the best resources available to make growth a priority, and optimize your chances for success.

Your financing package should include:

  • Company background
  • Drivers of growth
  • Management background
  • Assessment of security and collateral
  • Historical financial information with key operating statistics
  • Financial forecast reflecting the inclusion of the requested financing
  • Forecasted financial covenants indicating ability to service the requested financing at market acceptable leverage and liquidity levels
  • Commentary on key non-financial requested terms and conditions
  • Sources and uses of the financing

The elements of a strong financing proposal

Your financing proposal should include

  • a historical overview of your company,
  • details of your growth plan, your stakeholders and your financing requirements,
  • an overview of the historical financial performance of your business,
  • an outline reflecting the impact the requested financing will have on the business moving forward, and
  • a detailed account of how you plan to repay your lender within reasonable covenant restrictions, as well as potential risks you might encounter that could prevent repayment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
3 Nov 2016, Seminar, Toronto, Canada

You're warmly invited to attend our annual, complimentary seminar for charities on Thursday, November 3rd, 2016. Enjoy breakfast with your peers, then glean valuable insights about operating and growing successful charities from industry specialists who will be sharing their expertise and knowledge. Afterwards the presenters will be happy to answer questions, and there'll be plenty of time to connect with other attendees. Be sure to register soon—seats fill quickly!

9 Nov 2016, Seminar, Ontario, Canada

You're warmly invited to attend our annual, complimentary seminar for not-for-profits on Thursday, November 10, 2016. Enjoy breakfast with your peers, then glean valuable insights about operating and growing successful not-for-profits from industry specialists who will be sharing their expertise and knowledge. Afterwards the presenters will be happy to answer questions, and there'll be plenty of time to connect with other attendees. Be sure to register soon—seats fill quickly!

17 Nov 2016, Seminar, Toronto, Canada

You're warmly invited to attend our annual, complimentary seminar for not-for-profits on Thursday, November 17, 2016. Enjoy breakfast with your peers, then glean valuable insights about operating and growing successful not-for-profits from industry specialists who will be sharing their expertise and knowledge. Afterwards the presenters will be happy to answer questions, and there'll be plenty of time to connect with other attendees. Be sure to register soon—seats fill quickly!

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.