Unlocking the Power Of Business Financing Cash Flow: Discover Cutting-Edge Business Financing Solutions and Finance Alternatives

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YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!

Beyond Traditional Loans: Exploring Innovative Finance Options for Your Business

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the biggest issues facing  the business owner today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

 

 

BUSINESS FINANCING ALTERNATIVES IN CANADA 

 

 

Business financing ensures small business owners have the 'fuel' to operate and grow their companies.  But do some owners/financial managers sometimes fool themselves by thinking their current cash flow and finance alternatives work? We believe that might be the case regarding bank loans, cash flow lenders, and business finance.  Many options In cash flow based lending might be a good choice for your company. Let's dig in.

 

 

INTRODUCTION  - CASH FLOW BUSINESS FINANCING ALTERNATIVES IN CANADA

 

Whether you are bootstrapping your business for cash flow, every business owner knows that cash flows are vital to long term success - Understanding your alternatives that can help your business run smoothly and knowing what is available is key.

 

Companies with different types of assets require a complete understanding of how those assets can be liquidated, acquired, or monetized.  Sometimes, traditional bank loan lending might give your firm the lending solution you need. That's up to the bank and other lenders, for the most part, based on the overall financial condition of your business. In the long run, you might find that your financing is best suited to a non-bank alternative lender.

 

WHY ALTERNATIVE FINANCING? ALTERNATIVE BUSINESS FINANCING VS TRADITIONAL FINANCING

 

Business owners view banks as the go-to solution for secured and unsecured loans. However, banks will often require collateral to secure financing at the low rates provided by banks. However, banks typically only lend to companies with solid credit history, profits, and cash flows for repayment. Business owners also know that accessing approval on bank financing is very time-consuming.

 

Traditional business financing includes term loans and lines of credit from a bank or credit union. Commercial banking approval rates from banks are lower than those of alternative lenders. Approvals from banks may take a longer time.

 

Alternative lenders charge a higher premium if they offer funds to underfunded businesses. These lending methods are easier to apply for online. A business loan from a bank usually has a lower interest rate and a longer repayment term than alternative lending. You typically need at least two years in business to get a bank loan.

 

For those that can't access all (or any?!) of the finances, they need a revolving line of credit from an asset-based lender that will allow your firm to secure the type of cash flow/working capital you need.  It should also never be forgotten that simply managing payables and maximizing supplier credit is a key to overall cash flow management.  Companies with the potential to secure new large orders/contracts should also consider export guarantees or PO financing as an alternative to a small business loan.

 

There are some more esoteric and not always-considered options that, in the past, have been more exclusive and reserved for larger companies. These include 'securitizing' your sales or considering a convertible debt solution. That's another example of how alternative lenders provide business finance solutions to capital and cash flow needs.

 

A more commonly accessed type of funding for a cash flow loan is mezzanine finance, essentially unsecured cash flow loans. They are often reviewed as a 'bridge'; between debt finance and the dreaded 'equity' dilution that is not desired by owners wishing to retain full ownership and control.

 

 

 

HOW TO INCREASE CASH FLOW WITH ALTERNATIVE FUNDING  - ALTERNATIVE  SMALL BUSINESS LOANS 101!

 

Some individual and unique 'subsets' of asset-based alternative loan  strategies include:

 

Confidential Receivable Financing / Invoice financing for outstanding invoices/accounts receivable- this financing method is one of the most popular and accessible business funding solutions in Canada and a solid alternative to lines of credit for business.

 

It's a financing option that is paid back based on sales growth and helps to build business credit  - no debt is added to your balance sheet. Significantly less time in applying and approval is a big plus, unlike bank loans, which might take several months for many common types of bank financing.

 

The amount of money you can borrow under this funding method is unlimited and related to your sales growth and asset turnover in accounts receivables. Factoring is a practical solution for businesses with unpaid invoices - allowing the company to gain immediate cash flow. Invoice discounting/invoice factoring is Canada's most popular accounts receivable financing method.

 

Non-Bank Asset-Based Lines of Credit - Asset-based lines of credit via asset based lending is another popular non-bank option - providing revolving credit facilities and allowing the business to pay interest only on funds borrowed, given that the credit line fluctuates and replenishes with cash inflows. Asset-based lines of credit are secured by business assets such as receivables, inventories, fixed assets and commercial real estate - unlike a bank business line of credit which is typically unsecured.

 

Purchase Order Finance - Purchase order financing allows businesses to access capital when they receive large purchase orders or contracts - Business lenders provide funds required to fulfill orders, and lenders are repaid when customers pay. Supply chain financing and purchase order funding / Order fulfillment loans are creative ways to fund growth.

 

Inventory  Financing  - Financing inventories allows a business to leverage inventory to secure business funding - inventory financing for stock-based loans is often combined with receivables in a line of credit facility.

 

Revenue Based Financing - Revenue-based financing is a flexible approach to capital - Funding is based on a percentage of future revenues, giving a business a revenue-sharing financing approach without taking on debt on the balance sheet. Revenue-driven loans are prevalent in the ' software as a service industry.

 

Equipment Financing - The best acquisition tool for financing long-term assets for the small business owner - the most common leases are capital ' lease to own' options or operating leases signifying more of a short-term rental situation.

 

Royalty finance

 

Merchant Cash Advances  / Short Term Working Capital Loans for Small Businesses are a solid alternative to traditional loans with long amortizations - Poor credit history/credit score of owners can derail this type of funding -

These loans are lump sum loans typically repaid from sales or credit card sales over a 12-24 month period while covering business expenses - Small loans in the 25-150k range are typical under the merchant cash advance. These future ' sales-based loans ' evolved from retail merchant funding around credit card and debit card sales and are popular and accessible online. They provide a quick injection of funds for a percentage of future daily sales. A minimum personal credit score of the business owner is required.

 

Business Credit Card -  credit card financing is a convenient short-term solution to finance small business expenses under a revolving credit concept with predetermined credit limits, along with offering various awards

 

ALTERNATIVE FINANCING FOR SMALL BUSINESSES

 

Big Canadian banks approve only a portion of loans for small businesses, so it is prudent for business owners to explore financing solutions and funding alternatives.

Alternative lenders approved a large share of SMB loan applications. Alternative fintech lenders grew despite dwindling customer interest in traditional banking.
 

It should always be remembered that higher interest rates on alternative funding solutions are always more costly but provide access to capital.

 

Funding for startups can often be accessed through the Government Of Canada Small Business Loan program. Industry Canada delivers and sponsors. This solid program which is somewhat similar to a traditional bank loan. This program was modelled around the Small Business Administration ' SBA ' loan. Excellent credit, i.e. typically, a credit score of 650 is required by the

 

Interest rates/interest payments under the program are very competitive. Many entrepreneurs use the program for startup funding in the early stages of their business idea /project. Talk to the  7 Park Avenue Financial team to determine whether your local bank or credit union participates in the government-guaranteed loan and how to identify potential ' bad credit ' issues.

 

Grants and Subsidies: 

 

Governments and some other organizations often provide grants and subsidy programs to support businesses in specific industries or promote innovation. These non-repayable funds can be a valuable source of financing, allowing companies to fuel their growth, develop new products, or engage in research and development. Canada's Sr&ed program is a popular government funding program, and sr&ed refunds can also be financed.

 

Let the  7 Park Avenue Financial team help you with a winning business plan that meets and exceeds the requirements of banks and other commercial lenders.

 

These solutions distinguish themselves for many business owners because they provide billions of dollars of capital for SME COMMERCIAL FINANCE needs in... are you ready???... A very short period!

 

It's all about quick access to cash as far as most firms are concerned. At least, that's what business folks tell us. They hate it when financing stifles their ability to 'seize the moment' regarding new sales opportunities.

 

THE PERSONAL GUARANTEE ISSUE FOR SMALL BUSINESSES 

While personal owner guarantees are required for traditional bank loans and in almost all Canadian business financing for private firms, there is less emphasis on these guarantees regarding various alternative finance solutions. But for the most part, it's all about 'timelines' and the ability to access cash.

 

 

BENEFITS OF ALTERNATIVE FINANCING  

 

Alternative financing options offer several benefits, including more flexible borrowing requirements and faster approval. Many companies that can't access the financing they need from traditional financial institutions have access to numerous funding options in the alternative lending landscape in Canada. While many forms of alternative funding have higher rates, they can provide the capital access a company needs to fund day to day operations and access growth opportunities.

 

 

CONCLUSION - SOLVING YOUR CASH FLOW & BUSINESS GROWTH  

 

Boosting your cash flow is essential to the success of your business. Whether you choose a traditional or alternative financing option, evaluating each option carefully and considering the pros and cons is necessary.

If you're unsure which financing option is right for your business, consider speaking with an experienced Canadian business financing such as 7 Park Avenue Financial.

Managing cash flow is crucial for the survival and success of any business. By exploring cash flow financing solutions and finance alternatives, companies can optimize their cash flow, overcome financial hurdles, and position themselves for long-term growth.

 

Canada's business owners have several ways to secure business financing.  There are plenty of different options in terms of financing. Therefore your research on this will help determine the best solution for you. The good news is you never need only a traditional bank to get the funding for your business. Venture capital, peer-to-peer marketplace lending, and a crowdfunding platform are out of reach for ' raising money ' credit options.  They probably are!

 

Even traditional business loans are often not attainable for many firms. Funding small businesses in Canada can often be challenging - If your company is looking for some cash flow 'fuel' from forms of finance that will help you grow and run your business and for more information, speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you in taking your business to the next level. Stop pretending that newer financing options for business aren't for you!

 

 

  

FAQ: FREQUENTLY ASKED QUESTIONS  

What is alternative lending?

Alternate lending describes loans that occur not within a conventional financial institution. Alternative loans are more flexible and often have a fast application turnaround. Alternative lenders often offer loans in smaller amounts than banks which often specify minimum loan terms that are too high for a small business.

 

Alternative lenders also offer unconventional lending options that enable businesses to leverage the assets like the account receivable or the sale of credit cards instead of borrowing on credit. Many types of alternative loans are available. Hence there will likely be an alternative loan out there that matches your situation, and many types of alternatives are available to banks and traditional lenders.

What are the benefits of alternative lending?

Every business needs working capital to flourish. With poor funding options, startup enterprises will likely be forced into a slowdown quickly. Avoiding traditional bank loan routes may seem impossible, but there is a whole range of small business financing options accessible for entrepreneurs. Understanding the most competitive financing options will increase a  company's longevity and chances of survival. Have the right analysis that helps you get the proper credit options to suit your business needs.

  

What exactly is cash flow business financing?

  

Cash flow business financing refers to various strategies and methods businesses use to manage and optimize their cash flow. It involves accessing funds to cover operational expenses, invest in growth opportunities, and ensure smooth day-to-day operations from the business bank account.

 

 Why is cash flow financing important for businesses? 

 

Cash flow financing is crucial for businesses because it helps ensure a steady inflow and outflow of funds. It allows businesses to meet their financial obligations, manage working capital, seize growth opportunities, and maintain a healthy financial position in the business's cash flow.

 

 What are some common finance alternatives to traditional bank loans for businesses? 

 

 Finance alternatives include invoice financing or factoring, non-bank business line of credit, merchant cash advances, crowdfunding, angel investors and venture capital, peer-to-peer lending, grants and subsidies, and bootstrapping. These alternatives provide businesses different avenues to secure funds based on their specific needs and circumstances.

 

 How can cash flow financing solutions help businesses in challenging times? 

 

Cash flow financing solutions versus a traditional business loan can provide businesses quick access to funds during challenging times, such as economic downturns or unexpected expenses. They offer flexibility, speed, and tailored approaches to address immediate cash flow needs, helping businesses weather financial uncertainties and maintain stability.

 

What factors should businesses consider when choosing between different finance alternatives?

 

Businesses should consider factors such as their specific funding requirements, repayment terms, interest rates or fees, eligibility criteria, long-term implications, and the alignment of the financing option with their growth plans. It's crucial to assess the pros and cons of each alternative and determine which option best fits their unique situation and goals.
 

 What are some Alternative options for financing?

Alternative financing options for small businesses include cash flow lending solutions such as peer-to-peer lending, business credit cards, crowdfunding, microloans, invoice financing, and merchant cash advances. These options are becoming increasingly popular, especially for businesses not qualifying for traditional financing.

Click here for the business finance track record of 7 Park Avenue Financial

Alternative Financing Business Loans In Canada: A Smarter Working Capital Solution For Growth Financing ?

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YOUR COMPANY IS LOOKING FOR  BUSINESS ALTERNATIVE  FINANCE SOLUTIONS!

Breaking Boundaries with Alternative Finance: The New Face of Business Loans

 

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

EMAIL - sprokop@7parkavenuefinancial.com

 

BUSINESS FUNDING OPTIONS IN CANADA OUTSIDE THE TRADITIONAL FINANCE SYSTEM 

 

Business Loans in Canada come from ' traditional ' or alternative loans and working capital sources.

 

  

INTRODUCTION TO WORKING CAPITAL / CASH FLOW SOLUTIONS VERSUS TRADITIONAL FINANCING  

 

Around the time of the 2008 financial crisis, the nature of business financing and access to capital changed in Canada - a lot .. and can we not even talk about the Pandemic, please! Traditional lenders in Canada consolidated and somewhat retreated from SME financing in Canada. Alternative lenders have stepped in over the last number of years to fill the void, offering  Canadian business financing solutions that are accessible when compared to a traditional business loan.

 

For any business, large or small, access to business capital is critical - As a company's needs evolve, it is more evident than ever that non-bank business financing can provide every type of finance a business needs to grow. Let's dig in on the types of working capital and cash flow solutions you need.

 

Working capital and cash flow loans exist in more abundance than ever. So if you're a business owner or financial manager looking for help with small business financing outside of other companies' traditional thinking, let's dig in on types of business financing that make sense for your company!

 

  

  

UNDERSTANDING ALTERNATIVE FINANCE AND THE ROLE OF  TRADITIONAL LENDING VERSUS ALTERNATIVE FINANCING    

 

Alternative financing offers a large variety of Canadian business finance solutions; these include short-term working capital loans,  receivable financing solutions, non-bank business lines of credit, asset-based financing, and tax credit financing for r&d of film projects.

 

Traditional lending often entails complex application processes and strict requirements, with approvals primarily based on credit rating. Conversely, alternative financing offers a more accessible route with a streamlined online application process, faster turnaround, and a focus on a business's potential, making it an attractive option for businesses seeking swift, reliable funding.

 

 

Historically business owners and financial managers with SME COMMERCIAL FINANCE   asset finance and working capital needs worked through traditional channels, almost always' the bank. '  These firms traditionally don't have access to bank loans or the capital markets/venture capital. Given up on equity crowdfunding? So have many others! And don't forget equity funding will always demand a small percentage of your business - if not more!

 

Competition and efficiency in the Canadian lending markets have brought several new and different types of alternative capital solutions to your business - the challenge is knowing which is the right good option for your company and how one accesses capital in this manner.

 

UNSECURED LINES OF CREDIT

 

The golden solution in the past has been 'unsecured bank lines of credit ', focusing on companies with proven cash flow, great balance sheets, and good history for companies and owners. The problem is that thousands of firms, maybe yours? ... can't meet all those requirements, as logical as they might seem (if you're a banker).

 

Numerous alternative cash flow sources have grown steadily in Canada - one of the fastest-growing is in the area of receivables finance/invoice finance/invoice discounting,  where the ability to use your sales as collateral via business A/R overall credit rating is the appeal.

 

  

FINANCING OF WORKING CAPITAL  

 

Some great solutions are derived from this method of invoice factoring for business owners via the financial channels of a third-party factoring company for accounts receivable. For example, historically, your clients had to be notified of this process and financing. Not so fast, though! Utilizing Confidential Receivable Finance for unpaid invoices - acting as almost a bridging loan that allows you to generate immediate cash flow as your business sells and generates revenues while giving you the option as your firm takes responsibility to bill and collect with no notification to other parties as customer pay.

 

 

A factoring company, via accounts receivable factoring/ invoice financing, is, in fact, one of the most popular funding as an example of non-bank lenders who provide alternative funding.  Unlike banks, each  A/R  financing solution has its own benefits, so talk to the  7 Park Avenue Financial team about what suits your business model when you're looking for easier access and a streamlined approval and application process.

 

EQUIPMENT LEASING SOLUTIONS

 

When acquiring assets for your company (equipment, technology, vehicles, software, etc.) Equipment leasing is a bit unique in that it embraces both traditional forms and alternative finance needs. Almost any asset can be financed with considerable flexibility regarding monthly repayments, amortizations, prepayments, down payments, etc. Interest rates are very competitive regarding equipment lease financing - as well as it is a solid alternative to a bank loan with more stringent credit requirements in the traditional financial system.

 

That is what small business owners want to hear!

 

Clients often ask us why we are so bullish on alternative financing solutions. For a starter, don't get us wrong - Bank financing in Canada has a low cost, has a lot of flexibility, and provides virtually unlimited access to capital. Still, when it comes to unsecured business loan requirements, many firms can't meet bank criteria for borrowing.

But when ' the bank says no, '   working capital loans and asset monetization strategies from alternative lenders might work.

 

But reality sets in when many business folks realize that banks prefer ' upstream ' - namely, more significant deals with high-quality credit companies. Top experts tell us that one recent survey indicated over 40% of firms in the small to medium enterprise sector in Canada don't fully qualify for bank financing.

 

 

 ALTERNATIVE  FINANCE PRODUCTS / SOLUTIONS  

 

Alternative lending solutions are available for a broad range of business finance needs. Each type of financing suits a specific need around cash flow and working capital that help to fund business growth and profits.

 

P O financing

 

Tax Credit Financing (sr&Ed / film and TV)

 

Leasehold Improvements Financing

 

Condominium Corp Finance Loans

 

Management buyouts/acquisitions

 

Commercial Property Finance

 

Non-bank Asset-based business lines of credit

 

Bridge loans against real estate and equipment

 

Working capital short-term loans - Initial loans are typically based on a percentage of your sales financial history - Online lenders/peer-to-peer lending sites often offer this solution, also known as a merchant cash advance. Your business agrees to repay the loan on repayment terms that are on a typically fixed installment basis. Good owner credit history/credit score required.

 

It's no secret that organizations such as the CANADIAN FEDERATION OF INDEPENDENT BUSINESS.  Companies consistently cite that the SME COMMERCIAL FINANCE  needs of the Canadian economy always focus on the lack of and access; to.. more capital!

   

The Power of Alternative Lending: Empowering Businesses   

 

 

Many business owners and financial managers find their firms turned down by traditional bank financiers and are sometimes unaware of the criteria for SME borrowing in Canada when they want quick access to funding.

 

Small and medium-sized businesses must understand that traditional banks type financing will always revolve around the ' infamous ' 5 C's of business credit -

 

 

  

THE 5 C'S OF SMALL BUSINESS FINANCING APPROVAL   

 

Character

Capacity

Capital

Collateral

Conditions

 

Sometimes, you may want to ensure you have a solid business plan. The 7 Park Avenue Financial team prepares business plans that meet and exceed bank and commercial lender /alternative lenders' requirements. Startup funds and startup funding, in general, are difficult to access if you are not adequately prepared.

 

 

  

CONCLUSION - ALTERNATIVE BUSINESS FUNDING OPTIONS 

 

Canadian small and medium-sized business in Canada needs access to reliable sources of working capital - When conventional financing is not available and timelines to access traditional funding are long Canadian businesses can access alternative lending solutions that provide flexibility and ease of access to financing.  Alternative finance solutions are a compelling and needed alternative to traditional funding to support the growth of a business.

 

The bottom line?  Your business has finance alternatives for alternative lending solutions versus traditional financing for a financial product suited to your needs.  Business finance for small businesses in Canada will always be a challenge - but solutions do exist.

 

Speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with business loans and working capital solutions that make sense for your company and industry.

 

FAQ: FREQUENTLY ASKED QUESTIONS

 

What is alternative finance?

.

Regulated banks and similar financial institutions are great for many businesses. Still, the criteria they impose on smaller firms often can be too much to handle regarding bank loan requirements for business. Alternative lending refers to the need for other financing options versus traditional financing options so small companies may thrive and prosper in their respective markets without being suppressed by an unfair playing field favouring larger enterprises with more resources than these small and medium-sized businesses and startups have access to presently.

 

Alternative finance is a well-utilized commercial financing vehicle for available funding when companies can't raise funds based on their trading history. Alternative finance/ structured finance refers to non-bank financing via p2p lending, 3rd party commercial lenders / accredited investors, hedge fund managers, etc., who lend money..typically at higher interest rates and who view this as an alternative investment in alternative asset classes.

 

 What is alternative financing for small businesses?

Alternative financing refers to non-traditional methods businesses can use to obtain funding versus a traditional bank loan. These methods deviate from traditional financial institution such as standard bank loans and traditional business financing, including merchant cash advances, invoice factoring, or an online line of credit. They are primarily utilized by small- and mid-sized businesses looking for flexible, fast, and more accessible funding solutions via alternative business lending.

 

How does alternative financing compare to traditional bank loans?

Unlike traditional bank loans, alternative business financing offers quicker approval times, less stringent credit requirements, and a more streamlined application process than conventional bank loans. While traditional loans can take weeks or months to process for a business looking for a small business loan, alternative funding sources often approve and deliver funds within a few business days. However, alternative financing can have higher interest rates and shorter repayment terms than traditional loans.

 

Why is alternative financing becoming more popular among small businesses?

Alternative funding for small business loans is growing in popularity due to its flexibility and accessibility compared to traditional bank financing. Small businesses often face challenges obtaining traditional bank loans, like rigorous credit checks, long approval times, and high collateral requirements. Alternative financing provides a solution by offering various lending products, including asset-based loans and invoice factoring, focusing on the overall business performance rather than just credit history.

 

What types of alternative financing options are available for small businesses?

A wide range of alternative business loans and financing options are available for small businesses. Some of the popular ones include merchant cash advances, where companies receive a lump sum in exchange for a portion of future sales via the working capital loan based on an annual revenue calculation; invoice factoring, where businesses sell their unpaid invoices to a lender for immediate cash; business lines of credit, allowing firms to borrow as needed; and asset-based loans, using a company's assets as collateral to secure the loan.

 

What factors do alternative lenders consider when approving a business for a loan?

The alternative lender will look at various factors beyond business and personal credit scores. Alternative business lending criteria can include time in the business/industry, monthly sales, cash flow, and overall health. In many cases, alternative business lenders use technology to evaluate these factors quickly and efficiently, making the application process faster and simpler than traditional methods.

 

Click here for the business finance track record of 7 Park Avenue Financial

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Business financing needs in Canada often leave business owners/ financial mgrs with that ' not happy ' feeling when it comes to loans or alternative finance solutions. And by the way, in today's competitive environment there are some pretty smart people out there when it comes to running and growing their firms - yet even they are searching for ' the fix '.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.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.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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

Fixing Business Financing In Canada: Accessing Bank & Alternative Finance Loans

Purchase Order Financing In Canada

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THE PURCHASE ORDER FINANCE SOLUTION :

Purchase Order financing, as well as inventory financing, is two relatively new alternative financing solutions in the Canadian business environment. These two solutions provide additional flexibility when combined with traditional financing sources provided by your Canadian chartered bank or independent finance firm. Think of P O Financing as a short term finance options, allowing you to access capital to pay vendors and suppliers when you have a verifiable purchase order or contract.

WHAT IS PURCHASE ORDER FINANCING

It's a unique source of capital without giving up  equity. In P O Finance its all about the transaction specifically, providing you with the liquidity to grow your company without taking on additional debt. New clients at 7 Park Avenue Financial have quickly found that their current banking and funding arrangements formula are well beyond what they need in immediate financing. Let’s dig in.



P O Financing works very well in work-out situations, where the borrower’s existing bank/s do not want to finance all the purchase of the inventory as it goes beyond the borrowing formula set by the bank.



Traditional business and bank lending in Canada typically is unable to meet the SME need for financing of large purchase orders and contracts, and most clients we meet can't satisfy the bank requirements of collateral, strong financial statements, external guarantees, etc. Industry experts say that a significant percentage of all businesses requiring SME COMMERCIAL FINANCE solutions are constantly worrying about their cash flow, let alone the cash flowing of large new orders. Enter the P O FINANCE solution.

Who Uses Purchase Order Lending Facilities?

Growing and smaller and medium-sized businesses that have access to revenues otherwise not financeable utilize PO Finance - Your firm might not be able to generate the cash flow investment in a/r and inventory that comes with larger orders and contracts. The types of firms that use P O FINANCE are manufacturers, and distributors, as well as those firms that have an import/export business model. Typical clients looking for this type of creative financing have large bulges in incoming orders or some seasonality attached to their business.


Traditional business financing in the context of working capital and cash flow revolves of course around the traditional current assets of receivable and inventory. Even if your firm is well-financed and has a traditional bank line of operating credit you may have challenges in fulfilling large orders and contracts. This challenge becomes equally daunting when you don’t have traditional financing, so the ability to generate cash to fulfill larger orders and contracts becomes seemingly impossible. Utilizing P O Finance allows you to take on larger orders without the commitment of a debt financing/loan solution.


Purchase order financing/purchase order loans can provide you with the capital to fill those large orders and contracts, and, if properly put in place; can be very complimentary to your current financing.


As we have noted the concept of purchase order financing, aka ‘P.O. Financing ‘is a relatively speaking, new phenomenon in Canada.

HOW DOES P O FINANCING WORK?

So how do P O Loans work? Simply speaking financing is put in place to cover your material costs and direct labour costs, which are of course a significant part of your order or contract. We can safely say in many businesses that is 60-70% of the total order or contract based on most gross margins in any industry.

The purchase order funding process begins on your acceptance of an order from a verifiable customer. In the majority of these cases, clients of 7 PARK AVENUE FINANCIAL require financing because our client's supplier requires payment in advance. The working capital cycle has now kicked in! Most clients know that full payment from their client won't be received for probably another 60-90  days. Business owners of course do not want to lose the order and are typically unable to obtain Canadian chartered bank financing based on whatever their current financial position is.

The verified purchase order represents opportunity and value though - it simply requires accelerated funding. So in the P O FINANCE process your supplier is paid either by direct cash or in some cases a letter of credit with conditions related to your purchase order re-delivery, amount, pricing, etc. Key to P O Finance approval is your ability to present your company and management experience. It's safe to say the complexity of this type of financing is why it is more costly - there are a number of moving parts: timeline around the order and delivery, credit risk, etc.




Purchase order lenders distinguish themselves by being experts in the area of alternative finance. They have the expertise and ability to look at the entire order cycle, including the creditworthiness and legitimacy of your supplier/suppliers.

What Does The P O FINANCE Company Look For In Your Transaction? Applying For Purchase Order Financing

As we have mentioned P O FINANCE is a more expensive form of financing so your firm must be able to sustain the gross profit margins that satisfy your profits and the financing cost in the transaction. You should be able to provide the following at the commencement of your purchase order finance financing request:

Supplier Invoicing

Your firm's sample invoice to the customer

General business information such as financials, legal name of your company, etc



Your firm, therefore, now has the working capital to finance your production and fund purchase orders. What’s left of course is essentially the profit on your P.O. or contract.


While it sounds relatively simple and easy we would point out some key critical issues that will allow the Canadian business owner and financial manager to determine if his or her firm qualifies for such financing. We can first of all say there has to be sufficient proof that your purchase order or contract is with a valid, creditworthy party. Naturally, if there is any doubt that your order might not get paid, or that the customer is not creditworthy that precludes the successful completion of any purchase order financing.


You should also not view the purchase order financing as a long term financing solution, it is not that. The funds are generally repaid immediately when you have completed your order/contract.

PURCHASE ORDER FINANCING VS. FACTORING

There are also some technical issues that need to be addressed if you have secured financing arrangements in place already. For example, if your firm has a bank line of credit they would be required to acknowledge the security that is taken in the Purchase order and resulting receivables that you create out of that order.


In our own experience Purchase order financing frankly works best when there is not a secured lender in place already, but that’s just our firm’s observation. Additionally, on occasion, certain other collateral or personal guarantees might be required. We would hasten to add that if you have already provided guarantees to the bank or other firms it would seem logical that you would provide them on the purchase order financing, which is somewhat of a riskier transaction for the lender.

Most clients at 7 Park Avenue Financial realize that purchase order finance companies are really providing a one-stop funding that takes you all the way from the order to the collection of the receivable. Note that P O loans that allow you to fund purchase orders is often very well received by suppliers who know they are going to be paid. Also government purchase order financing is also available.


Another very critical point is the whole issue of gross margin. The issues are that you need good gross margins to complete purchase order financing! A firm that is in low margin very commodity-oriented business is not a strong candidate for P.O. Financing, because the combination of cost of goods, labour, overhead costs, and financing costs of the financing leaves very little for the business owner. So categorically good gross margins make a much better P.O. Financing deal. Costs in P O FINANCE tend to be different for each transaction based on a number of factors including the cost of capital, time to complete the order, etc. International purchase order financing may also bring new complexities to your transaction regarding sovereign risk.

So for the business owner and financial manager looking at purchase order financing lenders it is important to weigh the costs and benefits of your transaction. In many cases larger P O 's and contracts are a key part of company growth plans so they are prepared to forgo some profit to achieve sales goals. In many cases traditional financing simply can't react quickly enough to satisfy the timelines of your order. So alternative finance solutions such as P O Finance, Inventory Financing and A/R financing solve your financing need.. quickly.


So why has this type of financing become popular – that’s fairly easy to understand. First of all the current Canadian business financing environment is challenging – therefore any alternative financing vehicle has a strong chance of being embraced and becoming more popular. After that it simply makes sense that p.o. financing can be very successful for your firm if it gives your company working capital you didn’t have, , it allows you to grow and profit at greater levels, and overall improves your competitive positioning within your industry.


We strongly recommend that if you consider Purchase order financing that you enlist the services of a trusted, credible and experienced Canadian Business Financing Advisor with a track record of business finance success who can assist in maximizing your cash flow and working capital with this unique innovative type of financing.






7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.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.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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.






Stan Prokop
7 Park Avenue Financial/Copyright/2020

Business Loans Canada : Finance Via Alternative Financing & Traditional Funding

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Financing A Business In Canada

Business loans and finance for a business just may have gotten good again? The pursuit of credit and funding of cash flow solutions for your business often seems like an eternal challenge, even in the best of times, let alone any industry or economic crisis. Let's dig in.



Since the 2008 financial crisis there's been a lot of change in finance options from lenders for corporate loans. Canadian business owners and financial managers have excess from everything from peer-to-peer company loans, varied alternative finance solutions, as well of course as the traditional financing offered by Canadian chartered banks.

Those online business loans referenced above are popular and arose out of the merchant cash advance programs in the United States. Loans are based on a percentage of your annual sales, typically in the 15-20% range. The loans are certainly expensive but are viewed as easy to obtain by many small businesses, including retailers who sell on a cash or credit card basis.



Depending on your firm's circumstances and your ability to truly understand the different choices available to firms searching for SME COMMERCIAL FINANCE options. Those small to medium-sized companies ( the definition of ' small business ' certainly varies as to what is small - often defined as businesses with less than 500 employees ! )

Business Loans Alternative Financing In Canada

How then do we create our road map for external financing techniques and solutions? A simpler way to look at it is to categorize these different financing options under:



Debt / Loans



Asset Based Financing



Alternative Hybrid type solutions



Many top experts maintain that the alternative financing solutions currently available to your firm, in fact are on par with Canadian chartered bank financing when it comes to a full spectrum of funding. The alternative lender is typically a private commercial finance company with a niche in one of the various asset finance areas



If there is one significant trend that's ' sticking ‘it’s Asset Based Finance. The ability of firms to obtain funding via assets such as accounts receivable, inventory and fixed assets with no major emphasis on balance sheet structure and profits and cash flow ( those three elements drive bank financing approval in no small measure ) is the key to success in ABL ( Asset Based Lending ).



Factoring, aka ' Receivable Finance ' is the other huge driver in trade finance in Canada. In some cases, it's the only way for firms to be able to sell and finance clients in other geographies/countries.



The rise of ' online finance ' also can't be diminished. Whether it's accessing ' crowdfunding' or sourcing working capital term loans, the technological pace continues at what seems a feverish pace. One only has to read a business daily such as the Globe & Mail or Financial Post to understand the challenge of small businesses accessing business capital.



Business owners/financial mgrs often find their company at a ' turning point ' in their history - that time when financing is needed or opportunities and risks can't be taken. While putting or getting new equity in the business is often impossible, the reality is that the majority of businesses with SME commercial finance needs aren't, shall we say, ' suited' to this type of funding and capital raising. Business loan interest rates vary with non-traditional financing but offer more flexibility and ease of access to capital.

Business Loan Program Canada

We're also the first to remind clients that they should not forget govt solutions in business capital. Two of the best programs are the GovernmentSmall Business Loan Canada (maximum availability = $ 1,000,000.00) as well as the SR&ED program which allows business owners to recapture R&D capital costs. Sred credits can also be financed once they are filed.



Those latter two finance alternatives are often very well suited to business start up loans. We should not forget that asset finance, often called ' ABL ' by those Bay Street guys, can even be used as a loan to buy a business.



If you're looking to get the right balance of liquidity and risk coupled with the flexibility to grow your business seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success who can assist you with your funding needs.




7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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 more than 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Before 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