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Business Startup Loans

Expert: Fred Prunau

Kent asked:

A group of us are looking to build a golf course together. Our course designer is well known, the land is owned, zoned, and ready to be worked. But we have a money problem. A VC (venture capitalist) has agreed to give us a 3.5 million dollar loan if we can raise a million. We have exhausted our funds and need a solution.

Fred Prunau answered:

We offer a number of products designed to assist business start up and expansion, and would be able to assist in your situation, offering flexibility and service you may not be able to get from traditional lenders.

However, we would still require a financial investment from you, a down payment or other form of equity, in order to provide the loan. If the land you wish to use for the golf course is owned, you could use it as security for the loan if it is not possible to make the required down payment--it sounds like you may already be in a taxing financial situation. Be aware we would look at the liquidation value, not the commercial value, of any assets you use as security. The total values must equal the amount of the loan.

Another alternative is to seek other investors for your venture to help raise money for the down payment, avoiding the need to use other assets, such as the land.

In either case, the BDC may be able to provide assistance, but as a general rule, if you are seeking a loan of this size, most institutions capable of making such a loan will want to see a solid financial commitment on your part as well.

About the author

Fred Prenau is a project analyst at the Business Development Bank of Canada. The BDC is a financial institution wholly owned by the government of Canada. They have offices across the country assisting the development of Canadian small business through financial and consulting services. Visit them at

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