Small Business Finance Vs Corporate Financing . Fundamentals And Advantages In Canada

Why Big Isn’t Always Better In Canadian Business Financing


OVERVIEW – . Information on small business finance in Canada . How does it differ from corporate financing based on company size and types of solutions available ?


Small business finance in Canada . Whets the difference, asks our clients between their capital needs and corporate financing in Canada. We work with both types of firms and there is a case to be made that ' SIZE COUNTS ‘, but you might be surprised at how. Let' dig in!

Business owners often hear the business fact that small and medium enterprises are in fact the largest employer and the true 'engine 'of the Canadian economy. It is also reasonable to assume that many business owners and the management of smaller and medium size firms worry about competing against the big global giants.

These larger competitors in many cases have 'brands ', as well as unlimited financial strength.

However, do business owners really know what those competing challenges are and how they can focus in on addressing them in some manner? In many cases (not always) they also have access to finance solutions available to larger corporations. They just didn’t know it!

As mentioned previously financial strength of big firms and financial limitations of smaller firms is certainly a key area. Small and medium sized firms continually focus on cash flow and are challenged by working capital. The banks and larger financial institutions can be forgiven for wanting to lend more to larger corporations, since their loans are safer and more collateralized.

The small firm can’t finance their customers in the manner that larger corporations can. The large corporations even usual financial strength to further compete against product and price by offering financing arrangements via their captive finance companies - think IBM CREDIT CORP as an example, or Caterpillar Finance. Just some examples.

Smaller firms are also challenged by personnel issues; they have trouble retaining key successful employees around issues such as compensation and benefits. Owners are focusing on day to day problems and challenges, and can't always think long term in areas of employee development, etc.

Naturally smaller firms pay more in direct costs because they don't have buying power; as well they are often focused on a couple core products and competencies. Larger corporations can diversify geographically and product wise as we know. Financing costs and interest rates in general have always favored the larger companies who borrow.


Intuitively the consumer or business customer gravitates towards a larger corporation for products and services, if only for the perceived safety and warranty issues.

Well, we have seen areas where the big guys clobber the small guy. Let's turn the boat around!

Service/Service/Service - have we made out point?! Value add in smaller firms is often service and support. Customers want the personal touch and they clearly get that from a smaller firm.

Also, in a smaller firm, in general the business owner is very focused on working harder and longer with their customers - big corporations tend to favor broad stockholder approval.

The smaller firm is also more adept, and can move more quickly to adapt to market needs. Big companies can take a long time to react to competitive change. Communication and market needs are much focused in a small company - it might take days, weeks, and years for larger corporations to implement major market changes.

Customers and consumers hate bureaucracy, and smaller firms certainly have less of that - decisions are made easier, customer situations are rectified more quickly.

In summary, business owners often have a fear of the 'gorilla ' in their industry - the big corporate giant with brand and financial clout. Instead they should focus on specialized market segments, localization of their services, personal service, etc.

It doesn't hurt to be a small /medium sized firm if we do it right! While larger corporate borrowers have access to low rates and flexibility and unlimited capital offer by Canadian chartered banks, insurance companies, capital markets, etc the reality is that many of these solutions, sometimes downsized and costing more, are still available to the SME sector.

Solutions include:

A/R Financing
Vendor financing
Equipment finance
Non bank asset based lines of credit
Inventory financing
PO/SUPPLY Chain financing
Monetization of SRED or Film tax Credits

Whether you're in the SME sector in Canada or a mid market borrower seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and asset financing needs.



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 = ‘ ALL SIZE ‘ Business Financing In Canada







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