How much you can borrow is a decision that rests with your lender. Some criteria your lender will consider are: how much money your business plan says the project will require, how much collateral or personal investment you are willing to put into the business, and your personal and business credit history. As you develop a business plan, you must gather the appropriate financial data to make informed projections regarding startup costs (or expansion costs for existing businesses). These projections should show you how much you need to borrow and help you determine your ability to repay the debt.

You are unlikely to obtain 100% financing for your project from a lender. Lenders expect the borrower to share some of the risk and typically require an individual to cover at least 20% of the financing cost to start a business. Some banks will require an even larger owner equity injection depending on the industry or type of business. The equity you have or will have in the business will also be a factor.

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