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How To Finance Sales Growth Via These Numerous Working capital financing solutions
OVERVIEW – Information on working capital financing loans and strategies for Canadian business. Cash flow solutions depend on various unique factors to your firm and industry
Working capital financing in Canada is provided via numerous traditional and non traditional lenders.
Working Capital Financing in Canada is provided in a number of different ways to Canadian business owners and financial managers. The typical ‘go to ‘solutions are our Canadian banks and business oriented credit unions, but in recent years numerous non bank commercial lenders have populated the Canadian business financing landscape.
In many cases the hard core reality is that SME COMMERCIAL FINANCE needs are best provided by non bank firms who have a greater understanding and higher risk appetite as it relates to sales growth, receivable financing, inventory loans, and PO Financing and equipment leasing.
We get a lot of questions from clients who are looking for ' government grants and loans' .There are some grant type programs out there but in general they do not serve the needs of the average Canadian business owner as they relate to working capital.
There are two very viable grant and loan programs in our opinion. They are the government guaranteed Small Business Loan , aka CSBFL , aka SBL loan, as well as the federal SR &ED program. The Small business loan provides equipment and leasehold loans to Canadian business owners, and is not capped at a new high of $ 350,000.00.
This in or opinion is a great term loan, and has excellent, we repeat, excellent rates, terms and structures. But the reality is that this is a term loan and is not a working capital loan per se. When clients come to us for ‘working capital loans ‘more often than not they are referring to cash flow needs for inventory, receivables, and equipment.
Companies that spend R&D capital and invest in research can take advantage of Canada's SR&ED program. This is a non – refundable grant that covers approximately 40% of all the cash you have spent in this area. We encourage all business owners in Canada, if it is applicable, to speak to an advisor in this area. By the way, SR&ED credits can be financed and a ' SRED LOAN' is a great way to augment working capital and cash flow. Many start up firms consider this a great source of initial cash flows in their business.
Most Canadian business owners are not aware of what is known as a cash flow loan. A more sophisticated finance term for this loan is a mezzanine or ‘sub debt’ loan. For smaller and medium sized businesses these loans tend to go up to the 250k range and are offered by a specialty lender which is funded by the Government of Canada.
Larger cash flow and working capital loans tend to be in the 1 Million + range and are offered by non banks. These loans typically are unsecured, are used for working capital purposes, and have rates in the low to mid teens due to their unsecured nature. These working capital financing credit lines typically go under the term ‘asset based line of credit '. This facility margins your A/R, inventory and equipment into one large borrowing facility that mirrors the bank line of credit.
The good news about asset based lenders in Canada is just that... they focus on assets, with much less or no emphasis on ratios, covenants and personal guaratees required by traditional bank type solutions , But we never forget of course that the lowest cost and most flexible form of financing is bank credit and term facilities. They are just a lot more difficult to attain in the amount your business might require, especial for faster growth or early stage firms - as well as companies experiencing challenges.
In summary, working capital means different things to different business owners. Our focus has been on real cash flow and working capital for your business. Certain government programs might meet your needs in the areas of term loans, leasehold improvements, etc. But true working capital is the financing of current assets such as receivables, inventory, and purchase orders.
Like anyone, you would prefer to deal with an ‘expert ‘in business financing, so we encourage you to seek and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success.
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 :
http://www.7parkavenuefinancial.com
7 Park Avenue Financial
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
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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 40 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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