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Engineering Your Company For Proper Business Financing Via Traditional & Alternative Lenders - The Hunt Is On!
OVERVIEW – Information on working capital financing solutions in Canada . Approaching alternative or traditional business lenders for a loan requires this ‘ need to know ‘ info
Working capital financing and the right business loan / loans for their company has many Canadian business owners looking to either leave or search for new business lenders that meet their financial needs. The hunt is on. Let's dig in
A Sept 20 /2016 report in Canada's Globe & Mail indicated massive dissatisfaction with financial institutions - referencing a 40% amt as the number of borrowing businesses that are ' likely ' to leave their current business lender. Of great interest is that the main perspective of business owners/financial mgrs is that their bank or credit union does not understand their business - as well as indicating a lack of confidence in the expertise of their lender.
The other harsh reality is that firms looking for SME COMMERCIAL FINANCE and loans don't have the option that major corporations do - that's for both short term operating needs and long term growth financing. Those ' big boys' of course can tap into public and private equity as an example.
What then are realistic options for the small and medium sized business in Canada for generating working capital and cash flow? It's the lack of proper business financing in place that holds your firm back from accepting larger orders or new contracts. That also of course entails having to wait 30/60 or sometimes even 90 days for A/R to be collected.
The right working capital financing in place assists your firm to meet its daily requirements and allows you to grow the business. It also allows your firm to extend credit on favorable terms to your customers.
Solution? There are a number of solutions to consider. If all firms were the same size and had the same problems we might have some easier decisions. The fact is though that when we meet with clients to outline working capital solutions each company is in a different industry, they have different business model, and their funding needs vary by size and nature.
Let's recap some of the solutions available:
A/R financing / factoring/Confidential Receivable Finance
Inventory loans
Bridge Loans
Sale Leasebacks
Non bank asset based lines of credit ( these facilities combine your a/r, inventory and equipment assets into on borrowing facility that is margined much higher than bank facilities ) These facilities are often the best solution to overall operating financing needs - This type of borrowing does not put debt on your balance sheet - it monetizes /cash flows your assets!
Tax Credit Loans ( SR&ED,etc)
Royalty Financing
Equipment Financing / Leasing
P O / Contract financing
While some firms in the SME sector will always consider angel investors, going public options etc these solutions are in practicality very limited
Canadian chartered banks offer a number of programs, but you should ensure you feel you can meet bank requirements. Some of those requirements are that you have been established and the owners of the business have a good reputation and reasonably solid credit history.
You should be able to produce financial statements and demonstrate that your receivables and inventory are turning. It's great to produce a forecast or a business plan, which also assists you as a good planning tool.
Smaller firms should try and avoid credit cards, merchant advances, or friend and family loans - they all work but often are not the best alternative.
The government of Canada offers a Small Business Loan program that is one of the best programs in Canada for Canadian business. The one technical point on this program is that it covers only equipment and leaseholds and real estate, so you should ensure these programs meets your exact needs.
One other government entity on the federal side offers working capital term loans; these are cash term loans and are generally unsecured, with only the promise to pay of your company and yourself as owner. Rates are excellent for what you are getting.
If you're ' on the hunt ' for business lenders that make sense for your operating and capital needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan needs.
Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
ABOUT THE AUTHOR
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 45 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
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