Business Finance In Canada : Avoid These Mistakes With Commercial Lenders And Funding Needs

Are You Making This Mistake In Canadian Business Financing ?

OVERVIEW – Information on funding from commercial lenders in Canada . Using the right business finance loan or asset monetization strategy makes or breaks your company – Here’s why and how

Business finance is partly about sourcing the right financing solutions from banks and commercial lenders. Funding via debt, cash flow or asset monetization comes fraught with risk if wrong choices are made. Can you avoid those mistakes? We sure think so. Let's dig in.




Taking on debt in your business has all sorts of connotations - one of them that debt is simply not good -

which absolutely isn't the case if you utilize the right amount of leverage. When debt doesnt assist you in growing sales revenues or profits, while at the same time putting your company at risk... well that's when things become a ' mistake ' quickly.

So are there some reasons for assessing available forms of financing that make sense? You knew there was, one of them being business expansion via new premises, or perhaps entering new markets for your product or services.

But even if your business is generating profits they often are not enough to fund either of those decisions .At that points it makes solid sense to spend some times on cash flows or a business plan to ensure revenues will meet expectations.

Businesses in the SME COMMERCIAL sector can often utilize Federal govt business loans to move into new premises and perform leasehold improvements required to generate sales and profits. Those loans need to be repaid out of cash flow. Leasehold improvements for retail and other commercial concerns are challenging if only because it's tough to assess your real return on investment.

In many instances new equipment or technology need to be acquired. Equipment lease financing is as close to the perfect solution, and when these assets help generate sales and profits the planets are clearly aligned! Lease financing can be structured in a variety of ways, ensuring maximum flexibility re monthly payments, term, etc.

Inventory is often a key component in the search for growth. It can be financed on its own via your bank, or part of an asset based lending solution that focuses on the real value and turnover of your inventories.

We've talked about debt financing, but often the critical need in your business revolves around the cash flow cap that exists because of the need you have to carry inventory and extend credit to clients. This critical area of business is addressed through:

Working capital term loans

Canadian chartered bank lines of credit

A/R Financing (Factoring / Confidential Receivable Finance)
ABL Asset based lines of credit (they merge your A/R, inventory and equipment into one business credit line you can borrow against based on those asset levels)

Interest on cash flow loans, A/R facilities and bank credit lines reduce profits but grow sales - They are the perfect matching financing for cash flow needs

Banks as a general rule utilize a calculation known as ' cash flow coverage ' which in their case is usually a requirement that cash flows cover debt payments by a factor of around 1.5.

Our bottom line? Debt financing should be viewed as an investment in your business, but MUST be done properly. In many cases monetizing assets via cash flow financing is a solid alternative. Other alternative financing vehicles for cash flow include SR&ED tax credit monetization, PO Finance, Sales Royalty financing, etc.

If you want to ensure you're making the ' best choice ' in funding for business finance via commercial lenders and banks seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you avoid costly mistakes.



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 FUNDING 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