Capital use · Equipment & capacity
The machine is the easy part. Capacity is the machine, the people, the tooling and six months of working capital.
- Manufacturing · trades · energy · logistics
- Alongside the equipment lender
- $50K–$5M per company
- Operators who have commissioned lines
Equipment loans and leases finance the asset itself at 70–100% of cost, but not the tooling, training, hiring and working capital that make new capacity pay. Blue Ring Venture Capital members provide $50K–$5M per company for the full capacity plan in established Canadian $1M–$25M-revenue businesses — often alongside the equipment lender, and sometimes after a lender has said no.
The real budget
A $600K machine is a $900K project.
Our members' rule of thumb from their own plants: add 40–60% to the equipment quote. Rigging, electrical, foundations, tooling and fixtures, programming, a trained operator for three months before the line pays, and the receivables that grow as the new capacity ships. The lender covers the quote; the rest comes from cash flow — or from a guarantee the owner did not want to sign.
Member capital covers the rest, strengthens the balance sheet so the equipment lender's covenants hold, and comes with someone who has been through commissioning delays and knows which ones are normal.
- Equipment lender or CSBFP for the asset (70–100% of the quote)
- Member capital for tooling, people, install and working capital
- Canadian programs — FedDev Ontario, SWODF, AMIC and the current federal investment initiatives — where the project qualifies and needs a private match
- One member on the board through commissioning and the first year
Signs the lease is capping you
- Second or third personal guarantee on the same collateral
- Covenants that stop you hiring ahead of the new work
- A declined application because the new work is a new line of business
- Lease payments that start before the machine produces
What members will ask about the capacity plan
- The customer commitment behind the capacity — PO, LOI, forecast with history
- Current utilization of existing equipment by shift
- Quoted lead time today and after the project
- Tooling and fixture budget, separately from the machine
- Who runs and programs it, and when they start
- Maintenance plan and spares
- Power, floor space and permit lead times
- Tariff and currency exposure on the equipment and the inputs
- Working-capital effect at the new run rate
- What happens if delivery slips by 90 days
Structures for capacity projects
A shareholder loan with warrants or preferred shares are typical: the business gets a cash-flow-friendly grace period during commissioning, and investors are paid from the new margin.
Preferred shares with a dividend and buy-back right
Cash yield from year 1–2, redemption after 5–7 years.
Revenue-based note
A fixed share of monthly revenue until a 1.5–2× cap.
Shareholder loan with warrants
Interest plus a small equity kicker.
Majority or 50/50 equity
Majority or 50/50 equity — succession, turnaround or partner buyout.
Bridge loan with an equity stake
Bridge loan with an equity stake — a defined gap to cross, repaid from cash flow, with a share of the upside.
Also possible: Common shares (Minority equity — the owner stays in charge. Only with a clear path to an exit or buy-back); Convertible note / SAFE (Startup track only). Every deal is negotiated directly between you and the individual members who take part.
Equipment questions
The bank declined the equipment loan. Is that a red flag for you?
Not by itself. Lenders decline new lines of business, single-customer projects and companies mid-restructuring. Members will ask why and look at the plan on its merits. If the decline was about the company's fundamentals, they will likely reach the same conclusion.
Would you rather the company lease or buy?
Whatever produces the best cash-flow profile for the plan. Members are indifferent to the asset structure and very interested in the total cost and the covenants.
Can member capital be the match for a government program?
Yes. FedDev Ontario's programs, SWODF and AMIC all require applicants to show private capital, as do several of the current federal investment initiatives. Member capital qualifies as private match in most cases; timing has to line up with the program's intake, and the program decides, not us.
Does the investor take security on the equipment?
No. The equipment lender has that. Members hold shares or a subordinated instrument; they are paid from profits, not from repossession.
Related reading
Reviewed 2026-09-13
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Bank loan vs BDC vs revenue-based financing vs operator-investor: which fits?
For a $1M–$25M-revenue company, six financing shapes are realistically available: bank term debt, government-backed loans, BDC or mezzanine, grants, revenue-based financing, and equity from operators. Each has a different cost, speed, dilution and personal-guarantee profile, and most good outcomes combine two of them.
Read moreTalk to people who have done this
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Written by The Blue Ring Venture Capital team. Last reviewed .
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