Startup Funding In Canada : Business Start Up Financing Has Changed

Putting A Propeller

On Start Up Financing In Canada








OVERVIEW – Information on startup funding in Canada . Business start up financing has evolved into numerous options that depend on the nature and size of your venture



Startup funding in Canada provides entrepreneurs with the ' propeller' they need to achieve business start up financing that makes sense for entrepreneurs requiring start up financing that achieves ownership goals. Let's dig in.

As we've suggested in the past typically business owners gravitate to the bank when they are envisioning the capital they need to start their business.

The mission though, should you choose to accept it! is to understand the criteria Canadian chartered banks impose on a new business -they are looking for, unfortunately, firms with track record, cash flows, and acceptable owner equity. That’s a tad difficult when you are in start up mode.

So are there alternatives? Absolutely. It's all about ensuring that you and any prospective lender, alternative or traditional, has the incoming cash flows to make debt or operating commitments positive.

Although many businesses can claim to have started with no cash flow the general consensus is that an owner equity commitment is required.

In Canada our version of the U.S. Small business program is called the 'SBL ' loan. That brings a solid partner to your start up venture - the Canadian government via a guaranteed loan.

If you have reasonable personal credit and at least a minimum of 10% permanent equity in your business you're a solid candidate for a ‘BIL ' loan.

It's critical in start up financing to understand that a traditional (bank) or alternative lender will want to know business owner personal credit history. In Canada the ' magic ' score at a credit bureau to be approved for traditional financing is 650.

A solid business plan and cash flow is also a prerequisite for start up funding. That document will demonstrate to lenders how you will handle suppliers, tackle operational expenses, and handle term and operating obligations.

Because start up businesses don’t have access to all the cash the need financing sources must be considered. They include:

Personal resources
Govt small busines loans ' SBL'
A/R financing
Tax Credit Finance - ' SR&ED'
Start Up Working Capital Cash Flow Term Loans
PO/Supplier Financing

The type of financing you need, as well as the amount, will dictate rate/terms/structure

While interest rates are significantly higher for start up alternative finance they are a substitute for giving up equity so early on in the venture. One of our associates refers to it as ' renting equity', and it's an interesting term.

Private equity firms and ' VC's' will of course take a significant amount of ownership for any investment made - and truth be told most start ups don't remotely qualify for equity start up funding.

Do we have a short list for startup financing? We do, and it would include:

Assessing personal equity

Ensuring you have a solid business plan and cash flow

Consider both alternative and traditional sources of capital

Utilize 3rd part resources such as your accountant/lawyer/ financial advisor / key supplier

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who will ensure you know the rules when it comes to achieving start up success in Canada.


Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :



7 Park Avenue Financial = Canadian Start Up Funding Expertise








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CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Business Start Up Financing . Basic Rules For Startup Loan Funding

Cracking The Start Up Financing Code In Canada




OVERVIEW – .Information on business start up financing in Canada. How does the entrepreneur achieve the loan funding he or she needs for a new or early stage business



Business start up financing in Canada . Whether it's traditional, alternative, or just plain creative Canadian entrepreneurs want to know some of those ' basic rules' for ' cracking the code' to finance success. Let's explore some of those methods - and by the way some of these solutions can also help you grow an existing company.

It's no secret that that many business owners feel the door has closed on their chances of getting all the financing they need. Is that necessarily the case? It certainly doesn't have to be when it comes to a number of funding sources that allow you to access real world funding when you know what’s available and who to work with.

Canadian banks widely tout their offerings and expertise in business financing. However where the rubber hits the road is when the entrepreneur slowly realizes the capital he or she needs is harder to get and feeling scarcer all the time.

Business owners can of course dip into personal savings and assets to fund their business. This is typically done by tapping into home equity and registered savings plans. That is certainly not optimal, and always against our own preaching to clients relative to separating your business life from your personal finances.

The hard reality of startup funding is also that quite often not one single source of funding will get you all the loan financing you need. It might in fact come from a variety of sources, when, cobbled together, allow you to reach start up nirvana.

That brings up the point of proceeding with your business venture when in fact you don’t have the necessary funds you need. It can certainly be a double edged sword when you are unable to execute on your promised business plan, or vision.

We're primarily talking about debt financing here - equity financing on the other hand might be available from angel investors, friends and family, even that rare breed, the venture capitalist. If there are some basic rules for start up financing they often are somewhat non financial in nature - it’s simply maintaining our patience, flexibility, and the ability to downsize some of those earlier lofty goals.

A fundamental resource for start up success in Canada is in fact the bank, but it’s not what you think. We're talking about the government small business loan, aka the ' SBL ‘. While many SBL applicants may not become some of the largest corporations in Canada they can finance and grow a successful, profitable business in the SME (small to medium enterprise) sector in Canada.

The SBL loan has a lot of appeal to the start up. It includes very attractive rates commensurate with start up credit quality (let’s be honest - that's minimal!), long amortizations, no repayment penalties, and, can you believe it, a personal guarantee that is limited!

You can in fact approach a bank for a traditional (non SBL) bank loan, but be prepared with a solid business plan, demonstrable strong personal credit and collateral, and copies of purchase orders or contracts that make sense to a Canadian chartered bank.

Many entrepreneurs finance some or all of their start up with credit cards, both business and personal. While rates can in fact be attractive a real danger exists when problems arise and a personal credit crisis ensues, often taking years to correct.

There are some creative ways to finance startups - they include royalty agreements, or loans from strategic suppliers. In general suppliers are a valuable part of your start up loan consideration, as their capital via terms they extend is in fact real cash flow. Even SR&ED tax credits can be financed for real cash flow, allowing you to recover early stage R&D expenses.

Other more creative situations include business incubators, and even the new kid on the block - crowd funding.

So, can you crack the code on start up financing? Numerous realistic and viable options are available, as we have shown. Some work great, some work well in connection with others. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan and funding needs for any new or early stage venture.



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :



7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS START UP FINANCING




CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com



















Stan Prokop