Explained : Commercial Loans In Canada : Basic Business Loan Knowledge

Afraid To Ask How These 5 Types Of Business Loans Work?

OVERVIEW – Information on commercial loans in Canada . What does the type and jargon around business loan availability mean to the owner/manager

Commercial loans availability for Canadian business owners/financial managers often comes with terminology that confuses the benefits of a business loan with its actual availability. We’ll demystify some of that jargon. Let’s dig in.

Hopefully every business manager has some basics under his or her belt around areas such as rate, collateral, personal guarantees, secured vs. unsecured, etc. These are the essence of the majority of Canadian business financing. Not knowing how to finance your firm and where will often have the business being viewed as ‘ unstable ‘


We can say that 5 types of common business loans dominate the commercial lending landscape in Canada. They are:

Business Term Loans

Lines of Credit

A/R Financing

Inventory Finance

Equipment Leasing/ commercial mortgages

Naturally depending on your overall financing needs one or all these might actually be applicable.

Business Term Loans - these are suited for longer term financing needs, and while interest rates might be variable more often than not they are fixed rates and 3-7 year terms while optimal for long term financing this method of financing your business is more difficult to access.

Banks probably provide the majority of term loans in Canada and insist, rightfully so, on clean balance sheets, profits, and cash flows. A healthy dose of outside collateral on other parts of the business or the owner’s personal assets might also be required.

The one term loan that is a lot more accessible to entrepreneurs is the Canadian Small business loan - it's a govt guaranteed loan that finances up to 350k of equipment and leasehold needs.

Lines of Credit - Corporate credit lines revolve daily around the current assets of your business, typically receivables and inventory. The strong alternative to bank credit revolving facilities is the ABL Asset based credit line - it is easier to obtain, provides more liquidity almost 99% of the time, and allows you to include all the assets of your business as borrowing power.

A/R Financing / Inventory Finance - These two ' current assets’ are often the most critical parts of your capital structure. Outside the bank environment these assets are financing under working capital credit facilities. Your ability to turn receivables as they become due and manage inventory turns is key to the financeability of these two assets. When it comes to receivables financing our recommended solution is CONFIDENTIAL RECEIVABLE FINANCING, allowing you to bill and collect your own receivables and borrow up to 90% of outstanding A/R at any given time. It's a solid alternative when bank financing isn't available... or isnt enough.

Equipt Loans -/ Mortgages - Billions of dollars of capital assets are financed in Canada through equipment lease finance. Using independent commercial lease firms allow you to access capital outside the bank are strong sources of additional credit for any business .There is really no upper or lower limit for asset financing via the equipment lease. Technology needs are well suited to lease financing and provide business owners with a fair amount of flexibility in asset acquisition and replacement.


In business it’s critical to pick the right debt or asset monetization strategy, carefully assessing how long you need the financing. Considerations should include your firms overall credit quality, the amount of liquidity you have, as well as restrictions demanded by lenders under different loan scenarios.

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
to achieve the ' survive and thrive ' commercial loans your business requires. Knowing the basics of our 5 focus areas allows the owner/manager to access the right amount of capital at the right time and to not feel vulnerable in both tough and good times.





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 BUSINESS LOAN EXPERTISE





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

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