The need for a bank credit facility in Canada in Canada arises primarily because business, unfortunately, never goes in a straight line. Commercial business loans and revolving credit facilities satisfy that challenge, but which type (What there are choices? - Yes, there are! ) of working capital facility works for your firm? When it comes to banks with business loans .. Let's dig in!
CASH FLOW IS NEVER A STRAIGHT LINE!
As we said, a business doesn't go in a straight line for a couple of reasons - seasonality in some industries, bulges of cash flow needs, and the need to finance current asset accounts such as A/R and inventory.
THERE ARE DIFFERENT TYPES OF CREDIT FACILITIES FOR BUSINESS LOAN REQUIREMENTS
The business credit line is typically an asset monetization, but it can also be a term loan, cash flow loan, mezzanine facility, etc.
WHAT STAGE IS YOUR COMPANY IN?
Whether your firm is coming out of start-up mode or in full-fledged growth mode, there is always a need for financing - buying inventory, honouring your fixed payment obligations, and satisfying growth challenges.
WHAT ARE THE REQUIREMENTS FOR A BANK CREDIT LINE / BUSINESS BANK LOANS IN CANADA
For a bank credit facility in Canada, several key requirements must fall into place. Key among these is the ability to demonstrate your business is ' cash-flow positive. ‘ Canadian banks take this one step further; they look at historical cash flow, present needs, and future needs. The true beauty of the approved credit line is your company's ability to borrow and repay that line constantly - hence the term ' revolving.'
WHY MUST BUSINESSES MATCH FUNDS WITH FUNDING NEEDS PROPERLY?
Huge mistakes are sometimes made when business owners use short term credit facilities, i.e. working capital borrowing, to address the need for long term financing - typically equipment, fixed assets, leaseholds, real estate. The bottom line is that that is simply a mistake and can lease to disastrous consequences.
PROS AND CONS OF BANK CREDIT
No secret that our Canadian banks prefer larger transactions - they come with covenants and tough approval criteria, but the benefits - liquidity, low costs, growth facilitation, and removing the need for more equity are, benefits rarely equalled with other types of financing, many of which are more costly. In the current low interest rate environment business borrowing costs less than ever. Long-term interest rates for term loans and commercial real estate loans and mortgages of course continue to be at all-time lows.
BUSINESS LOAN INTEREST RATES CANADA
Real estate needs can also be covered with a variety of commercial mortgage or bridge loan solutions. Variable rate and fixed rate term loan solutions are always available in commercial banking. Business bank terms and conditions require a certain level of due diligence in ensuring you are matching financing needs with the right business credit solution.
Online banking covers off many business borrowing needs these days.
THE CHALLENGE OF THE STARTUP / EARLY STAGE FIRM IN ACCESSING BUSINESS CREDIT
Smaller businesses and startups face a more extensive challenge. Requirements for the business, and owners, include good personal credit histories, no CRA issues, the ability to demonstrate business and personal assets, and quite often a business plan or cash flow forecast.
WHY SEPARATE YOUR PERSONAL CREDIT FROM BUSINESS CREDIT NEEDS?
As we explain it to our clients it's often the rising to the challenge of separating your business life from your personal financial life. When things go awry damage can easily be done to the owner's personal credit scores, making it difficult to borrow both from your business or your personal needs - i.e. mortgages, etc.
IS THERE AN ALTERNATIVE TO A BANK CREDIT LINE? THE SMALL BUSINESS CHALLENGE
Did you know there’s a strong alternative to the bank credit facility? It's the non-bank Asset-based line of credit. Offered by private commercial finance firms, a facility monetizes accounts receivable, inventory, and equipment into one working capital borrowing facility. Depending on the borrower's size and overall profile, it can be equal in pricing to banks, but more often than not is more expensive.
5 OTHER BUSINESS CREDIT SOLUTIONS
Remember also that various subsets of asset-based lending provide the same type of cash flow solutions for business - they include:
A/R Financing (We recommend CONFIDENTIAL RECEIVABLE FINANCE)
Inventory financing
SR&ED Tax credit monetization
Purchase Order Financing
Working Capital cash flow loans
CONCLUSION - HOW TO GET A LOAN FOR A SMALL BUSINESS
If you need assistance to protect your business and asses growth options in evaluating the type and need for a bank credit facility and if you are looking to remove the mystery and enigma in Canadian business financing seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with loans for small business and commercial business loans that are tailored to your needs.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Email = sprokop@7parkavenuefinancial.com
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/2021
Bank Credit Facility Commercial Business Loans | 7 Park Avenue Financial
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