How To Obtain Business Financing In Canada

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Could You Put Some New Business Financing To Good Use?

Business financing in Canada has never been as important as in recent times - A company can fail in the best of times, whether it's poor finance practices around your existing financing strategy or simply the inability or lack of knowledge around business capital , cash flow, and working capital solutions . At 7 Park Avenue Financial we believe any firm can benefit from a better overall financing strategy.

And boy have things changed ! Long gone are the days when funding a company simply revolved around low interest long term bank loans, when approval seemed cumbersome but ultimately successful.



7 Park Avenue Financial's vision was founded specifically on that landscape that changed. No secret that these days not all business borrowers fit the mold of traditional financiers such as the Canadian chartered banks.

Many businesses try online lenders - yet while the applications and loan process is viewed as online there is a distinct lack of personalization that your company and industry might need. Even worse is that the multitude of on line lenders simply confuses the business owner, if not downright deception in a few circumstances.

In the case of the short term working capital industry, which evolved out of the U.S. Merchant advance loans many Canadian borrowers have found they can approach and get approved by several lenders.. in effect they ' stack ' new loans on top of each other

When investigating on line solutions we encourage clients to ensure they are dealing with a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success to eliminate any disastrous financing.

A proven solution towards the path of solid business financing is simply to analyze short and long term cash flow needs ( a cash flow plan ) that allows your company to understand where liquidity is needed.

An ' informed ' business borrower armed with proper knowledge around the types of financing and cost of their financing needs is the best scenario to strive for. In many cases your industry will typically benefit from a type of financing used by many of your competitors and that can assist your own firms funding journey.


While many owners/ mgrs and entrepreneurs in general focus on sales revenue growth as the key metric to success that motivation has to be complemented with good cash flow management & financing solutions geared to your cash flow and asset monetization needs .


Sales will drive a lot of your financing choices and will in many cases dictate or suggest what type of debt finance or asset monetization you will utilize. While it's important to be optimistic about sales growth that same revenue issue can be a source of stress when it comes to cash flow.


One reason why ? Simply because building inventories and receivables and investing in new assets are cash uses, not sources, as our good friends accountants would say.


While cash flow and sales budgets are important and reflect good mgmt the real world dictates that Murphy’s law will often kick in , which might mean:

Large New Sales or Contract Opportunities

Seasonal cash flow needs

Loss of a major customer

What Is The Best Solution To Finance Sales Growth ?

ANSWER : A traditional or alternative business line of credit ( tradional = non bank )


1. Canadian Chartered banks


2. Non bank commercial finance asset based credit lines



It often also takes new/used assets to build and grow a business, i.e. equipment, machinery, rolling stock, technology a la computers, software, etc. In that case equipment lease financing is your best bet as it conserves cash flow and matches the benefits of the asset in question to cash outflows. From start up to mega corporations 80% of businesses of all size utilize lease based asset financing.

Business Financing For Smaller Companies / New Companies

Newer businesses, mostly start ups should consider the Canadian Govt Small Business Loan - aka the ' SBL ' loan. That loan is guaranteed by the govt and only requires a 10% personal guarantee against the loan which can be anywhere up to 1 Million dollars depending on the asset you wish to finance.


Cash flow concerns boil down to liquidity. The 2nd most liquid asset you have on your balance sheet is receivables. Collecting them promptly and financing them properly is key to business success.


For those firms that can't access or get approval for the amount of business credit line they need numerous solutions are available, the most popular often being A/R financing via a ' factoring' or 'Confidential Receivable Financing ' program. This solution monetizes sales as you generate revenues - instant cash. Key advantages include: instant liquidity and no additional debt on your balance sheet.


Businesses in the SME sector in Canada (small to medium enterprise) will never have too much cash. Increasing sales, buying assets, hiring people drains cash- sometime slowly, other time not so slow!


Some other solid real world solutions to cash flow and loan needs include:


SR&ED Tax Credit Financing


Sales Leasebacks


Unsecured cash flow loans


Short Term Working capital loans

Mezzanine Financing ( Unsecured cash flow term loans )


Financing a business in Canada, in ordinary, or extra-ordinary times takes some time, knowledge and access to funding solutions that are in your firms best interest . Stay educated and ensure you are working with someone who is on your side when it comes to maintaining finance solutions tailored to your business health. At 7 Park Avenue Financial we call that ' Financing With The Intelligent Use Of Experience '.