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Small businesses, that SME sector we're always talking about at 7 Park Avenue Financial often has the biggest challenge. It's all about alternative small business funding. Let's dig in.
When it comes to raising finance needs and acquiring business loans for your business today’s environment calls for looking far beyond the traditional solutions of the past - that is where alternative lending and alternative financing options have grown in popularity.
More often than not that has meant ' the bank ' as the sole solution provider of business capital and the 'go-to' for funding options. The variety of alternative finance solutions offered by the alternative lender has given rise to a whole new way of financing in Canada.
Banks by their nature put heavy emphasis on historical and present cash flow, external collateral, and personal guarantees and banking covenants. Not all businesses can meet those requirements!
Business owners who are unable to raise capital from conventional lenders have found that alternative business financing solutions that have significant benefits are readily available, It is of course important also to ensure that they consider any of the risks and costs that come with any type of business financing.
f you are a small or medium business owner who has struggled with obtaining a loan in Canada in the past, or even if you want to avoid the headache and frustration associated with conventional lenders, there are several sources of alternative lending from which you can choose. Each has its own unique set of benefits and drawbacks, so be sure to consider them all carefully.
Some have called it ' debanking'! Industry stats show that a large percentage of applications by firms in the SME COMMERCIAL FINANCE sector are in fact declined by banks for a variety of reasons - the bottom line is these firms simply don't fit what the pro's call ' the credit box ' of banks and their fiduciary lending responsibilities.
But by addressing the proper cost of capital versus growth opportunity as well as the ' risk ' element associated with any form of traditional or nontraditional finance a whole new world of capital providers is out there. Traditional bank loans for small business have traditionally been unable to satisfy entrepreneurs hoping to start, grow, or acquire a business.
HOW TO ADDRESS SEARCH FOR BUSINESS FINANCE IN THE CANADIAN LENDING INDUSTRY
What then is the best way to look at some of those alternatives, and, as importantly, what are they?! It starts by assessing your need, which is usually in one of three categories:Growing sales
Refinancing
‘Other’
That 'other' can cover various scenarios, one of which might mean a forced exit from your bank relationship - i.e. the dreaded ' special loans' category.
As we have said, understanding how things work, cost and risk are the key elements of a new financing strategy. That kind of thinking will often determine what's best for your business.
Looking for some key tips around alternative financing as well as new sources of business financing and capital? We've narrowed it down for you as follows:
SOLUTIONS TO CONSIDER FOR TRADITIONAL AND ALTERNATIVE FINANCING
Keep an open mind to new solutions available
Consider both traditional and alternative financing solutions
Understand what you need - i.e. new assets, working capital, investment
Focus on potentially a combined solution of different methods of business finance
Ensure you are in a position to present your company properly - i.e. current financial statements, a strong exec summary or business plan, etc
Be prepared to consider ' Plan B '!
Cost of financing and interest rates
BUSINESS FINANCING SOLUTIONS RECAP
Let's recap business financing solutions most typically available to your firm - they include:
SOLUTIONS OFFERED BY TRADITIONAL AND ALTERNATIVE LENDERS - WHICH ONE IS RIGHT FOR YOUR FIRM?
Bank credit lines/term loans
A/R financing / Invoice financing / Invoice factoring
Inventory loans
Equipment finance
SR&ED Tax credit bridge loans
Sale leasebacks of owned assets
Non bank business lines of credit - Advanced alternative lending facilities
Unsecured cash flow loans
Royalty finance
Business Start Up Loans - The Canada Small Business Government Guaranteed Loan
CONCLUSION
The appeal of alternative lending arises from the ease of access as compared to traditional financing norms. Even online portals offering relatively quick ease of access to short term working capital loans and other types of financing have gained a lot of popularity.
In many cases, even the banks have participated in some of these online portals in some manner, including lender finance solutions. The domination of Canada's chartered banks has definitely seen a dent put into its dominance.
Part of the growth in alternative lending stems simply from the fact of a new and continue awareness of financing options - When it comes to asset based loans the ability to financing the balance sheet is at the top of the list in Canadian alternative finance.
It is interesting to note that a large portion of alternative finance solutions is in fact American owned firms who have chosen to enter the Canadian market.
So when it comes to alternative lending and getting a loan in Canada , and if your firm needs finance ' fix ' seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan and cash flow needs for capital lending in Canada.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Click Here For 7 PARK AVENUE FINANCIAL website !
7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.
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 100 Million $ of financing for Canadian corporations.
Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced
business financing consultant
.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 financing 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.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
7 Park Avenue Financial/Copyright/2020
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