Personal unsecured funds and funds secured against the enterprise's own assets need to be documented and reviewed separately. Mixing the two into a single 'investment total' without distinguishing them can obscure whether the actual investment is genuinely at risk in the way the category requires.
Separate the loan documents by what actually secures them
Ask for the complete loan or credit agreement for each source of funds and identify what collateral, if any, backs it. A sibling's unsecured personal loan and a line of credit secured against the target business's equipment raise different questions for the same file. Have counsel and a qualified financial reviewer confirm how each piece is properly treated before the investment is finalized.
Create a source-and-security chart for every borrowing. Obtain signed loan agreements, lender statements, collateral registrations, disbursement records, bank statements, and transfers into the enterprise. Funds must be irrevocably committed and at risk; a liability secured by the target enterprise's assets cannot simply be counted like unsecured personal borrowing. Also document the investor's qualifying treaty-country nationality—Canadian permanent residence alone is insufficient—at least 50 percent ownership of the enterprise by nationals of that treaty country, and the investor's operational control or qualifying ownership. The common mistake is merging proceeds at the destination account and losing the terms that determine how each tranche should be assessed.
Hypothetical example: a Windsor custom-cabinetmaking owner funds an American studio with a personal loan secured by his Canadian home, an unsecured note from a former partner, and proposed financing against the studio's machinery. He gathers each note, security schedule, draw record, and bank trail before closing. The machinery-backed amount stays separately identified for legal review; an accountant's combined total cannot erase which property supports each debt or whether every dollar is genuinely exposed.