Having been on both sides of the table, I know well the feeling of going to the bank looking for money. Whether it’s in good times or maybe your first time, you’re almost giddy. It seems like you’re nearing the end of the race. The whole world feels like it’s revolving around you.
In that moment, the conversation feels like it’s about your plan, what you want to build, and how you see it working. And, perhaps if you don’t let the excitement take over too much, you will think about where your plan will take you.
I don’t want to be the guy holding the pin close to your bubble, but the bank usually has a different conversation in mind.
One of the first mistakes people make is treating it like they’re going in to convince someone. Like it’s them versus the bank, and with a little luck, the excitement is going to rub off on the banker. It isn’t. There are really three parties in that room: you, the banker, and the money. And while the banker is your liaison to the decision-making process, it’s less a pile of cash sitting on the desk earmarked for your pet project and more a vault protected by guard dogs and lasers.
Before you get deflated and run out screaming for the hills, understand the real dynamic. The banker plays a unique role in the conversation. Yes, they guard the west gate from thieves and vagabonds. But they also take what you bring in and translate it into something the institution can evaluate.
A lot of what gets said in that meeting never makes it into the application. Not because it doesn’t matter to them. Because it may not matter in the decision.
Understanding that distinction makes the process easier. More than that, you can see it like the Matrix. You’ve cracked the code, and the world of finance isn’t as scary anymore.
How lending has changed
Years ago, lending decisions leaned more on the person and who they were. Your reputation and whether someone trusted you.
Now they lean more on the structure. Character still matters, but it doesn’t carry the deal on its own anymore. The plan has to stand without it.
That matters to first-time kennel buyers because many still treat financing as a personal conversation. In reality, it has become a business case.
Build or buy: two different files
People often frame the build-versus-buy decision as a personal choice. Do you want to create something from scratch or step into something that already exists?
To a lender, those are two very different files.
If you’re buying an operating kennel, there may be revenue history, customer patterns, existing infrastructure, and numbers that can actually be stress-tested. If you’re building, most of that doesn’t exist yet. You’re asking the lender to back projections, timing, market demand, construction execution, and your ability to get to profitability.
That doesn’t mean building can’t be financed. It means the burden of proof is different. When you buy, existing cash flow may carry more weight. When you build, planning and credibility carry more of it.
When we took over our kennel, the operation was largely cash-based. No payment terminal. No e-transfer. Limited money trail. From the outside, it looked smaller than it really was. We assumed we were buying a side operation rather than a serious business.
Once we got inside, it became clear there was more demand than the surface numbers suggested, and more room to grow than we first thought.
Existing financials matter. But numbers without context can mislead in either direction. That’s one reason lenders still ask hard questions even when a business is already operating.
What the bank is really testing
You can make financing sound complicated, but most of it comes back to a simpler question: why do you believe the numbers you’re presenting?
Why fifty percent occupancy? Why not thirty? Why not seventy? Why this pricing? Why this payroll? Why this timeline? What happens if costs rise, or if bookings come in slower than expected?
That is the real conversation. Not whether you have a business plan. Whether the assumptions inside it hold up when someone pushes on them.
One of the biggest surprises for first-time kennel buyers is the equity they need up front. A lot of people think in residential terms, assuming they’ll need a small down payment and can borrow the rest the same way they would with a house. Commercial lending is a different discussion depending on the asset, borrower, lender, and structure.
For a kennel, expect to put down 25 to 35 percent of the deal. That range isn’t arbitrary. A kennel is a specialized asset, which makes lenders want more skin in the game than they’d ask for on a standard commercial property. If you’re buying an established operation with clean books and a track record, you may land closer to the 25 percent end. If you’re building from scratch, or if the lender sees anything in the file that reads as risk, you’ll land closer to 35, sometimes higher. On a ground-up build with no comparable cash flow to point to, some lenders want 40 percent or won’t touch it at all.
That alone eliminates many plans before they start.
The second surprise is that modern lending has tightened. Higher rates. Stronger debt-servicing requirements. Less tolerance for vague growth stories. You can’t walk in saying you expect to lose money for three years and hope the bank sees the vision. The path to viability has to be credible and close enough to matter.
What the numbers look like
The gap between a basic build and a full commercial build is wide.
In the United States, a prefabricated metal kennel building runs roughly USD $25 to $50 per square foot for the structure itself, not including interior fit-out, runs, drainage, or mechanical systems. In Canada, commercial construction currently averages between $200 and $300 CAD per square foot nationally, with significant regional variation.
A kennel isn’t a standard commercial build. The specialized drainage, HVAC configurations, interior surfaces, and run systems push costs toward the higher end of any published range. Rural builds look cheaper on paper but come with their own costs: well drilling, septic systems designed for high-use animal facilities, long driveway construction, and hydro trenching. If you aren’t prepared or capable of doing the work yourself, site costs alone can add $50,000 to $150,000 before a single yard of concrete is poured.
The reason this matters to the financing conversation is simple. An underfunded site plan reads as if the operator hasn’t done the full homework. The bank will notice the gaps before you do. Every line item you can’t explain is a question you’ll have to answer across the desk, and not always with a good answer ready.
If you want to pressure-test your build numbers before you sit down with a lender, HKC Construction has a free estimator. It won’t account for kennel-specific drainage and HVAC decisions, but it provides a credible starting point for the commercial build cost conversation.
All numbers matter. Some matter more.
The cost per boarding space matters more than the total build cost. A facility that costs $700,000 CAD and holds thirty dogs carries roughly $23,000 per space. That number shows up in your pricing, your break-even point, and whether the business can survive a slow season.
The bank will run exactly that calculation. Run it first.
Understanding the numbers matters more than having them
I could build projections for you. But if you don’t understand what’s driving them, they’re not worth much.
Understanding what each variable is doing inside your projections is the difference between a plan that holds up and one that falls apart the moment someone asks a question you hadn’t thought about.
When the banker asks why you projected payroll at a certain level, the answer can’t be “that’s what my spreadsheet said.” It has to be that you know what a kennel attendant costs in your market, how many suites one person can reasonably cover, and what happens to that ratio on a long weekend. The same goes for occupancy, pricing, utilities, and insurance. Every number needs a story behind it, and the story has to match what the banker has already seen from other operators.
When real life interferes
Our original approval to buy was conditional on selling our old house. That sale dragged on longer than expected. At some point, it became clear the timing wouldn’t line up. The kennel property was available now. Our house sale was not.
So we used second-tier financing to hold the deal. Higher interest. Less friendly terms. An early payout penalty we didn’t have much leverage to fight.
For a period, we carried two mortgages. Anyone who has done that knows it changes the feel of every month. You stop talking in theory and start thinking in cash flow.
Then the house sold. We expected to revert to the original structure. But by then, it was no longer a purchase file. It had become a refinance file. In the months after taking possession, we had improved the property enough that the appraisal came back far stronger than when we bought it.
That changed the options. We refinanced against the new value and rolled in personal debt taken on for upgrades. The pressure didn’t disappear. But it changed. We moved from being constrained by capital to being constrained by what the business could actually support.
That is a far better problem to have.
This matters beyond our specific situation. The bank doesn’t finance your purchase price. They finance the lesser of the purchase price or the appraised value. If you’ve negotiated a deal at $800,000 and the appraisal comes in at $700,000, the bank is working from $700,000. The gap becomes your problem to solve, usually out of pocket.
For kennels, this matters more than in standard commercial real estate because appraisers often have limited comparable sales to work from. The appraised value can land meaningfully below the negotiated price. A buyer who didn’t plan for that gap is suddenly short at the closing table.
My background at the bank meant I understood what the appraiser needed to see. I was led to find more comparables than most buyers would think to bring. We weren’t just buying what the numbers showed. We were buying what we knew the numbers could become. That’s how you find a diamond in the rough, not by hoping the appraisal goes your way, but by understanding the appraisal process well enough to present the case properly.
You can do the same without a banking background. Bring in kennel-specific valuation data, even from outside your area. Give the appraiser something better to work with than the generic commercial comparable next door.
Plan for it before you need it.
Vendor take-back: when the deal needs a bridge
There’s another tool worth understanding, not because sellers line up to offer it, but because it sometimes becomes the only thing that closes a deal.
Vendor take-back financing, or VTB, is when the seller carries part of the purchase price as debt. Instead of receiving the full amount at closing, they agree to be repaid over time with interest. The amount varies from deal to deal. There’s no standard percentage because it’s negotiated directly between the buyer and the seller based on what the bank will and won’t finance and what the seller is willing to carry.
A kennel that has been built and operated well for many years carries real value in its land, buildings, client base, and reputation. That value is legitimate. But the bank only finances what it can pick up and sell if things go wrong. Land and buildings qualify. Goodwill doesn’t. That reputation, the loyal client base, the ten years of referrals, all of it has a name on a balance sheet. It’s called goodwill, and it’s worth real money to the right buyer. But it isn’t something a bank can repossess, so they won’t lend against it.
That gap between what the business is worth and what the bank will finance is where the down payment becomes a problem. Even qualified buyers can find themselves short. The pool of people who can actually close shrinks.
A vendor take-back bridges it. The seller gets their price. The buyer gets into the deal with less cash at closing. And because the seller is now carrying a note, they have a financial reason to care whether you succeed. That tends to produce better knowledge transfer, smoother client introductions, and a more invested transition.
In a business driven by relationships and reputation, those factors matter more than people expect.
One caveat worth knowing: some institutional lenders are reluctant to accept VTB arrangements. If the note is treated as debt rather than equity in the deal structure, it changes the debt service calculation and can affect your qualification. That’s not a reason to avoid the tool. It’s a reason to understand how your specific lender views it before you build it into the offer.
It’s worth knowing the terms before you get locked into a deal you can’t afford, especially where the vendor note sits relative to any bank financing. This isn’t a tool to pursue without proper legal and financial advice, but if you’re looking at established kennels with real acquisition prices, it’s worth the conversation.
What the bank has already seen
I know this from the other side of the desk.
When I worked at CNHi (Case New Holland Industrial), part of my role involved initiating the repossession process for farmers who couldn’t make their payments. Tractors. Combines. Equipment that represented everything they’d built.
But it was never really about the equipment. You take a tractor away, and a farmer can’t feed his cows. You take a combine, and he can’t get his crops off. The machinery was just the thing you could put on a form. What you were actually taking was how that family made its living.
Nobody feels good about that day. Not the farmer. Not the lender. You don’t walk away thinking you did something right just because the paperwork was in order.
When a kennel closes, there are staff who show up every day, care for animals, and build something alongside the owner. They had nothing to do with the financing decision, and they carry part of the cost when it goes wrong.
That’s why lenders do their due diligence upfront. Not to protect the institution in the abstract. To avoid that day entirely. What they’re actually looking for in your plan is flexibility. Can you reduce labour costs if bookings drop? Can you absorb the work personally during a slow stretch? Is the business structured to survive a bad quarter without missing a payment?
The stress tests and the what-if scenarios aren’t looking for reasons to say no. They’re trying to make sure that if they say yes, it holds.
There’s something else worth understanding. Banks don’t want to be the ones who shut you down. When a borrower starts to struggle, lenders often let things run longer than they should, hoping the situation corrects itself. That instinct isn’t generosity. It’s risk aversion. And it usually makes the eventual outcome harder, not easier.
The time to prove the business can handle a downturn is before you borrow. Not after you’re already in trouble.
A kennel is a specialized asset. The drainage, the runs, the HVAC, and the configuration all serve one purpose. If the business fails, the question of what the building is worth becomes genuinely difficult. These aren’t hypothetical questions. They’re questions lenders have already had to answer in real situations, with people on the other end.
When a lender picks your plan apart, they’re not doubting you personally. They’re accounting for everything they’ve already seen go wrong.
The better question
Most people ask whether they can build it or buy it. That’s not the first question.
The better question is whether the business can stand on its own without assuming everything goes right.
Capacity doesn’t generate revenue. Occupancy does. And occupancy takes time. I spent years watching farmers build for what they wanted the operation to become, full capacity from day one, everything in place, and end up with expensive infrastructure and nothing to fill it. The same pattern shows up regularly in kennels.
If your projections only survive at full occupancy, the plan hasn’t accounted for the real world. If they survive at half, you have a business that can carry itself while it grows.
That is what the lender is trying to answer. And if it only works when everything goes right, it’s not ready yet.
Want to go deeper? Explore the Viability Framework at johngkent.ca/viability-framework/
Kennel Connect maintains a database of kennel properties listed for sale across North America.
If you’d like a quick checklist to go with this article, grab the free one-page Kennel Financing Checklist below.
