How much down payment do you actually need for a business loan in Canada?

There is no single down payment number for a Canadian business loan — the honest answer is a range from roughly 10% to 35% of project cost depending on the loan type, and up to 50% on some acquisitions. A CSBFP loan has no formal minimum, but lenders typically finance about 90% of eligible costs, leaving you to fund the rest. BDC advertises "no down payment required" on some products yet in practice expects a real owner contribution. Conventional banks want 20–30% or more for their best terms, and commercial mortgages run 20–35% down. This article sets out the expectations by loan type, explains what actually counts as an equity injection — including vendor take-backs, HELOCs, and gifted funds — and covers how the business plan should present the number.

One framing point before the detail: lenders call this the equity injection, not a down payment, and the distinction matters. A down payment is a percentage you clear to unlock a product. An equity injection is evidence — the underwriter reads your capital at risk as the clearest signal of commitment, one of the core things every lender reads a plan for.

How much equity does each loan type expect?

Here is the summary, with the detail on each row below. Where a figure comes from lender or broker commentary rather than published program rules, the table and the sections that follow say so.

Loan type	Typical owner equity expected	Basis
CSBFP term loan	~10% of eligible costs + all ineligible costs	No regulatory minimum; lenders typically finance up to ~90% of eligible costs
BDC term loan	10–30% in practice	BDC markets "no down payment" on some products; practical expectation per lender and broker commentary
BDC commercial real estate	Can be 0% — up to 100% of project cost	Published BDC product terms
BDC equipment loan	Often 0% — up to 125% of purchase price	Published BDC product terms; down payment "in some cases"
Conventional bank term loan	20–30%+ for best terms	Common lender practice, not a published rule
Commercial mortgage	20–35% down	Common lender practice; banks finance 75–100% of value depending on the property
Business acquisition	10–50%; 20–30% is the working rule of thumb	BDC guidance; ~20–25% average per Canadian lender commentary

The pattern across the table: the stronger the collateral behind the loan, the less cash the lender needs from you. Real estate and equipment secure themselves; goodwill-heavy acquisitions sit at the other end.

Does the CSBFP require a down payment?

No formal minimum exists in the program regulations — but that is not the same as zero. The Canada Small Business Financing Program leaves underwriting to the participating banks and credit unions, and in practice those lenders finance up to about 90% of eligible costs. Scotiabank and CIBC both describe their CSBFP products as financing up to 90% of eligible purchases. That leaves the borrower funding roughly 10% of the eligible costs plus everything the program will not cover — the owner's own labour, standalone goodwill, share purchases, and any vendor take-back portion of a purchase price.

The ineligible-cost point is where CSBFP borrowers most often underestimate the cash they need. A $500,000 project with $420,000 of eligible costs is not a $50,000 equity problem — it is $42,000 against the eligible portion plus the full $80,000 of ineligible costs, or $122,000 of borrower funding. The use-of-funds schedule in a CSBFP plan should make the eligible/ineligible split explicit precisely so this arithmetic is visible before the underwriter runs it.

There is also a soft floor below the arithmetic: a near-zero contribution is a credit-committee flag regardless of the 85% government guarantee, because the lender still carries 15% of any loss and wants the owner exposed alongside it.

Does BDC really require no down payment?

Treat the marketing claim carefully, because both halves of it are true. BDC does state that no down payment is required on some products, and its published terms back that up at the product level: the commercial real estate loan finances up to 100% of project cost, including moving costs and down-payment-type expenses, and the equipment loan finances up to 125% of purchase price to cover shipping, installation, and training, with a down payment required only "in some cases." Real, published terms — for those products, on files BDC likes.

For BDC term lending generally, though, commentary on BDC's underwriting practice puts the expected owner contribution at roughly 10–30% depending on the loan type and the risk profile of the file. That figure comes from broker and eligibility commentary on how BDC actually adjudicates, not from a published BDC rule — which is exactly why the plan should not lean on the "no down payment" headline. And on acquisitions, BDC's own published guidance uses 20–30% as the rule of thumb (more on that below), which tells you how the institution thinks about owner capital when the collateral is soft.

The practical reconciliation: BDC's 100%-financing products exist where hard assets secure the loan. Everywhere else, plan for a contribution in the 10–30% band and let a lighter requirement be a pleasant surprise. A BDC-ready plan that states a specific equity figure and names its source reads as a borrower who understands the difference between a product brochure and a credit decision.

What do conventional banks and commercial mortgages expect?

For conventional term loans — no CSBFP guarantee, no Crown lender — the common practice among Canadian banks is to look for 20–30% or more owner equity for the best terms. That is lender practice rather than a published rule, and it moves with the file: an established business with strong cash flow and hard collateral can push the number down; a start-up or a thin-collateral deal pushes it up. The trade is explicit in how CSBFP, BDC, and the big banks compare: the conventional bank route offers the lowest rates, roughly prime + 1–3%, and prices that advantage partly through the equity it expects you to bring.

Commercial mortgages sit in a band of their own: 20–35% down is typical, with banks generally financing 75–100% of a commercial property's value depending on its condition and resaleability — again per lender practice rather than a fixed rule. A generic light-industrial unit in a liquid market sits at the favourable end; a single-purpose building the bank would struggle to resell sits at the other.

How much down payment do you need to buy a business?

Plan for 20–30% of the purchase price — that is BDC's published rule of thumb for acquisition financing, and commentary on Canadian lender practice puts the average around 20–25%. The full observed range is wider, roughly 10% to 50% depending on the lender and the deal: a management-buyout insider with years in the business, or a buyer in a strongly cash-generative company with clean financials, may negotiate toward the bottom of the range; a first-time buyer of a goodwill-heavy business should expect the top half.

Acquisitions demand more equity than asset purchases for a structural reason: much of the price is goodwill, and goodwill cannot be repossessed. The lender's real security is the future cash flow of the business under an unproven new owner — so it wants that owner heavily invested in making the cash flow appear.

And to close off the search query directly: zero-down acquisition financing does not exist in Canada. BDC's guidance on financing a business purchase describes every credible structure as a stack of buyer equity, senior debt, and vendor financing; anyone marketing 100% financing is describing a structure a Canadian lender will not fund. The legitimate route to a lower cash contribution is filling the gap with the instruments below, negotiated in the open. The business plan for buying a business should show the full financing stack, with the equity line first.

What counts as an equity injection?

Lenders accept more than a savings-account balance. The recognised sources:

• Cash and surplus savings — the cleanest form, and the benchmark everything else is measured against.
• Third-party investor equity — capital from an investor taking shares counts as equity in the deal. The lender will want the shareholding documented and will read the cap table for who controls the business.
• Gifted funds — a documented gift from family is generally accepted. "Documented" is the operative word: a gift letter and a visible transfer, not cash appearing in the account the week of application.
• Home-equity proceeds (HELOC) — one of the most common equity sources for Canadian small-business borrowers, and lenders accept it. The caution is concentration of personal risk: you are placing your home behind the business, on top of whatever personal guarantee the loan itself carries. Usable without apology, but price the downside honestly before signing.
• Vendor take-back — significant enough to get its own section.

What does not count: money borrowed unsecured elsewhere and dressed as savings. Lenders ask about the source of the injection precisely to catch equity that is actually debt, and a discovered misstatement ends the application in a way a smaller honest number never would.

Does a vendor take-back count as your down payment?

Functionally, yes — lenders commonly treat a vendor take-back (VTB) as quasi-equity. A VTB is a portion of the purchase price the seller agrees to be paid over time rather than at closing. Because it is subordinate, patient debt — repaid after the senior lender, per BDC typically amounting to 10–15% of the transaction — it behaves like equity from the senior lender's seat: it shrinks the senior loan, sits behind it in priority, and absorbs loss first.

It also does something cash cannot: it prices the seller's honesty. A seller holding 10–20% of the price in a VTB is betting their own money that the business performs under new ownership — lenders read that as skin in the game, and it tends to speed approval. A seller who refuses any VTB on a goodwill-heavy business sends the opposite signal.

Two boundaries. First, a VTB supplements the buyer's cash; it does not replace it — lenders still want the buyer's own capital in the stack. Second, on a CSBFP-financed acquisition, the VTB portion of the purchase price is an ineligible cost — the program will not finance it — so the financing schedule has to keep the CSBFP dollars and the VTB dollars on separate lines.

How should the business plan present the equity injection?

As a specific number with a named source — never a vague assurance. The equity line in the financing schedule should read like this: "Owner contribution: $120,000 — $85,000 from personal savings (statements attached), $35,000 documented gift from family (gift letter attached)." Three habits separate a plan that clears this section from one that generates a follow-up email:

1. State the figure; don't imply it. "The owner will contribute the balance" forces the underwriter to do your arithmetic and wonder why you didn't.
2. Name the source and paper it. Savings, investor equity, gift, HELOC, VTB — each is acceptable; an unlabelled contribution is the only kind that raises questions.
3. Match the number to the loan type's real expectation, not its marketing. A BDC acquisition plan built on "no down payment required" reads as a borrower who hasn't done the reading. A plan that says "owner equity of 25%, consistent with BDC's published 20–30% guidance for acquisitions, plus a 15% vendor take-back subordinated to the senior facility" reads as one who has.

This is one of the sections where professional drafting earns its fee, because the equity narrative touches the financing schedule, the use-of-funds table, and the personal financial statement at once — and inconsistency among the three is what underwriters are trained to find. Bridge Note, a Canadian business plan service that writes lender-ready plans for BDC, CSBFP, and big-bank loan applications, builds the equity section to the standard above: a sourced figure, reconciled across every schedule in the plan, stated against the actual expectation of the lender being approached.

The bottom line

Down payment expectations in Canadian business lending run from roughly 10% on a CSBFP file to 35% on a commercial mortgage, with acquisitions planning around 20–30% — and the published exceptions (BDC's 100% commercial real estate and 125% equipment financing) exist because hard collateral stands in for cash. Equity is broader than savings: investor capital, documented gifts, HELOC proceeds, and a vendor take-back treated as quasi-equity all count, each with its own risk and its own paperwork. What no loan type offers is zero: a real contribution, stated as a specific sourced figure, is the price of being taken seriously — because the underwriter is not reading the number for its size so much as for what it says about the person asking.

Frequently asked questions

Is 10% down enough to buy a business in Canada?

Sometimes, but don't plan on it. Canadian lenders finance acquisitions with owner equity from roughly 10% to 50% of the purchase price depending on the deal, and BDC's published rule of thumb is 20–30%. A buyer at 10% cash typically needs something else carrying weight — a vendor take-back treated as quasi-equity, deep industry experience, or a strongly cash-generative target. Plan the file around 20–30% and treat anything lower as a negotiation, not a baseline.

Does a vendor take-back count as my down payment?

Often, functionally, yes. Lenders commonly treat a VTB as quasi-equity because it is subordinate, patient debt repaid after the senior lender — per BDC, typically 10–15% of the transaction. A VTB of 10–20% also signals seller confidence in the business under new ownership, which lenders read as reduced risk and which tends to speed approval. It supplements the buyer's cash; it does not replace it.

Can I use a HELOC or gifted family money as my equity injection?

Yes, both are accepted in practice. Home-equity proceeds are among the most common equity sources for Canadian small-business borrowers, and documented gifted funds are generally accepted — with the source papered, not just asserted. The HELOC caution is personal risk: you are placing your home behind the business on top of any personal guarantee. Either way, the plan should state the figure and name the source.

Is zero-down business acquisition financing possible in Canada?

No. Zero-down acquisition financing does not exist in Canada as a lender product. BDC's acquisition-financing guidance describes every credible structure as buyer equity plus senior debt plus vendor financing. The realistic path to a low-cash deal is a larger vendor take-back plus strong buyer experience, negotiated openly with the lender — not a structure that hides the absence of equity.

Does BDC really require no down payment?

Read the claim narrowly. BDC's published terms do offer up to 100% of project cost on commercial real estate and up to 125% of purchase price on equipment — products where hard collateral secures the loan. For term lending generally, commentary on BDC underwriting puts the practical owner contribution at roughly 10–30%, and BDC's own acquisition guidance uses 20–30% as the rule of thumb. Plan for a real contribution; treat the headline products as the exception.

Sources

1. What is the minimum down payment to buy a business? — BDC, 2026
2. How to finance a business acquisition — BDC, 2026
3. Commercial Real Estate Loan — BDC, 2026
4. Equipment Loan — BDC, 2026
5. Canada Small Business Financing Program Guidelines — Innovation, Science and Economic Development Canada, 2025
6. Canada Small Business Financing Program — CIBC, 2026
7. Canadian Small Business Financing Program — Term Loan — Scotiabank, 2026
8. BDC loan eligibility in Canada: credit score, revenue, down payment and collateral requirements — GrantHub, 2026
9. How to finance the purchase of a business in BC: loans, seller financing and investor options — Business Finders Canada, 2026