Capital structures for the agri-food sector. 

Financing for a business, particularly within the agri-food processing sector, is typically structured into two primary categories: Debt Financing and Equity Financing. Each category represents a distinct method of financing and carries different implications for the business' ownership, control, and financial obligations. 

The choice between debt and equity, or a combination of both, depends on various factors, including the company's stage of development, its financial health, growth prospects, risk tolerance, and market conditions. A well-balanced capital structure is crucial for the long-term success and sustainability of an agri-food processing business.

Debt Financing 

This category involves borrowing money from external sources that must be repaid, usually with interest, over a specified period. Debt can come in various forms, including term loans, lines of credit, and government backed loans and programs. 

Equity Financing 

Equity financing is typically used for financing soft costs in a project. Soft costs are defined as items that are usually not financed by debt. Such as marketing and advertising, initial hiring of labor and purchase of inventory, research and development, and permits and cost overruns on construction. Examples of equity financing include equity funding (selling ownership stake in the company), owner’s capital, angel investors, venture capitalists, private equity firms, and equity investors. 

Ready to talk to a financial partner? Here’s some key information you’ll need.

As you head to your initial funding conversation, bring the following information with you and be prepared to talk about your agri-food processing business.

Try to provide:

• 2-5 years of historical financial statements
• A year-to-date financial statement that includes an in-house balance sheet and income statement
• Projections and/or cash flow forecasts
• A personal net worth statement
• Valuation of security
  • Appraisal of equipment
  • Appraisal of land and buildings
  • Appraisal of inventory if applicable
• A list of equipment and current payment terms
• Aged accounts receivable and accounts payable report
• Current inventory report

While you may not have all of these documents ready, the more you have available, the more your financial partner will be able to understand the story behind the numbers. 

An opportunity to consider.

The ATB | EDC Trade Expansion Lending Program (TELP) is a significant opportunity for agribusiness in Alberta. This program allows eligible exporting businesses to explore new international markets and capture domestic opportunities. If you’d like to work with an ATB ag relationship manager that knows the agri-food processing business or you’re interested in talking to someone about TELP in more detail, reach out.