Financing plan: definition, explanation, mechanism

Indispensable when starting a business, the financing plan establishes the list of expenses and resources of the company at the time of its launch. Whatever the method of financing for which the entrepreneur opts, the latter must present this document to its potential financiers (banks, individuals through crowdfunding, etc.). What is a financing plan? How to build it? What is his goal ? What is the difference between initial and projected financing plan? So many questions that we answer through this article.


The financing plan: Definition, explanation

The financing plan: Definition, explanation

A financing plan is a provisional document in the form of a table. It lists all the financing needs of a company and the resources to finance these needs. It should be noted that companies with more than 300 employees have the legal obligation to carry out a financing plan. The same is true for companies with sales of more than 18 million euros. Although the financing plan is mandatory for large companies, it is the companies that are being created that are most needed. In this case, it is called the initial financing plan. This is the document that will be of particular interest to us throughout this article.

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The initial financing plan is composed of two elements:

  1. The permanent needs of the company: these are the essential expenses to launch the company. Among these are:
  • Investments (real estate, intangible or corporeal): business, machinery, license, patent, etc.
  • Financial fixed assets : rental deposit, guarantee, etc.
  • The need for working capital or BFR (stock + customers – suppliers)
  • Amounts locked up for immediate use : cash, current purchase, etc.
  1. The sustainable resources of the company: it is the whole of the means guaranteeing a sustainable financing of the durable needs. We find in particular:
  • The capital contributed by the founder or the partners
  • The capital contributed by external investors
  • Loans
  • Subsidies
  • Etc.

The financing plan, what is it for?

The financing plan, what is it for?

Allowing you to know the expenses necessary to launch a new company and the resources that will be allocated to it, the financing plan is an essential document for the definition of its business plan. In addition, it allows investors to have answers to several questions:

  • How big is the funding?
  • Is the business start-up project funded in a correct, realistic and balanced way?
  • What is the extent of the risks for a financier willing to invest in this project?
  • Are short-term needs covered by short-term resources? Just as sustainable needs by sustainable resources?


All of these elements will make it possible to answer the big question that a bank or a potential investor asks himself: is the project viable? Indeed, if business creation seems risky or if, for example, needs are greater than resources, everything will suggest that it is better not to invest. In the event that the business start-up project is viable, the funder will be interested in the elements present in the financing plan in order to determine its own contribution. We will come back to these details later.

Initial and projected financing plan, what differences?

Initial and projected financing plan, what differences?

The initial financing plan, like the financing plan , is essential when starting a business. Indeed, these two documents will make it possible to determine the viability of a project . Like the initial financing plan, the forecast consists of resources and needs. However, this last document will focus on it for a longer period, usually three years .

The provisional financing plan will include the elements of the initial financing plan, but will reveal several additional data:

  • New needs and resources at the beginning of each year
  • Change in working capital requirement: a negative WCR at the end of the year will become a resource, while a positive WCR will be a new need to finance
  • Cash flow or CIF : this is the cash flow notionally cashed at the end of the year


Although it is particularly speculative, the forecast financing plan is also an interesting indicator. Indeed, it allows to define a little more precisely the viability of a project . In the event that it shows unbalanced financing for example, it would be clear that the creation of a business must be rethought. It can also be useful to gauge the business plan chosen by the entrepreneur. The financing plan could indicate in particular whether the project is too ambitious in the long term and therefore if it is necessary to rework it. Admittedly, the initial financing plan might suggest that the project is viable for one year. However, with the projected financing plan, it is possible to demonstrate if this is the case at three years.

Be careful not to confuse the financing plan and the financing table! The latter term refers to the cash flows of resources released and needs mobilized in a year. By analyzing the variations of these two flows, it is possible to anticipate the evolution of the company and thus to undertake new investments accordingly.

Examples of initial and projected financing plans

Examples of initial and projected financing plans

Find two examples of purely fictitious financing plans:


  1. Initial financing plan:
1. Start up costs 45,000 1. Capital contribution of the founder 59,000
2. Intangible assets 0 2. External capital contribution 45,000
3. Tangible fixed assets 39,000 3. Honorary loan 0
4. Financial fixed assets 9,000 4. Ready to start a business 7,000
5. Stocks 31,000 5. Grant 2,000
6. Cash 5,000 6. Loan 16,000


RESOURCES129 000 €

  1. Forecast Financing Plan:
investments 13,000 0 0
Variation of the WCR 50,000 21,000 12,000
Repayment of loans 0 0 0
dividends 0 0 0
TOTAL NEEDS 63,000 21,000 12,000
CAF 5,000 15,000 20,000
Increase in capital 30,000 0 0
New loans 30,000 0 0
TOTAL RESOURCES 65,000 15,000 20,000
GAP (Resources – Needs) 2,000 – 6,000 8,000

What you need to know about a successful financing plan

What you need to know about a successful financing plan

As we have seen, the financing plan is a particularly useful indicator to convince a financier to invest in his business creation project. To achieve this, it is important to keep several tips in mind:

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  • Sustainable resources must at least be equal to sustainable needs : if not, you will have to reduce your needs or find an additional investment
  • The capital contributed by the founder is decisive : the more important they are, the more the entrepreneur demonstrates his motivation to potential investors
  • It is better to keep personal finances and / or cash: a primary practice in the case of an overly optimistic financing plan
  • Do not underestimate your financing needs: it will be more difficult to obtain a second loan or a new financing solution if they are not planned
  • It is imperative to build several scenarios: with three financing plans – optimistic, normal and pessimistic – you will be able to anticipate any unexpected situation (loss of a customer, increase of expenses etc.).

Before embarking on a business start-up and therefore in developing a financing plan, it is also important to know the practices of banks and potential investors. In order to reduce their risk taking, the funders:

  • Will rarely invest more money than the founder
  • Will not finance the WCR or the tangible investments
  • Will not support any project whose CAF in the first three years is less than the indebtedness.

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