Financing Rate Confusion ? Mapping Bank Business Loan And Borrowing Rates In Canada

Business Borrowing Rates And Costs Shouldn’t Be A Frightening Truth

OVERVIEW – Information on borrowing rates for Canadian firms seeking financing solutions . What factors affect the financing rate for a bank business loan or commercial non bank finance solution


Borrowing rates and the financing rate for a bank business loan or other forms of commercial financing often are a disconcerting issue for Canadian owners and financial managers. Talking to clients we're often explaining (defending?) the costs associated with different types of borrowing. So.. The (not so) frightening truth ... Let's dig in.

We can quickly break down our subject into 2 categories - consumer/retail borrowing and business funding. We're talking solely about business funding here. We can further break that down into a bank business loan, or financing that is provided by commercial finance companies in Canada. And by the way a lot of those business financing firms, non bank in nature are in many cases subsidiaries of U.S. firms.

Almost always, and certainly currently, business bank rates are at an all time low. Should this be a surprise to the Canadian business owner/financial manager? Not really, as it's simply the spread between what the bank is paying us on our deposits versus their profit requirement on the mark up of those rates.

Confusion reigns supreme quite often because there's a myriad of bank products and services that all come with their own lingo - base rate, ancillary costs

(our favourite!!) etc.











Behind the entire bank pricing is of course the policy by the Bank of Canada as it pertains to the banks borrowing and lending with the government and themselves. That’s, fortunately, a subject for another day.

When it comes to business financing transactions from banks or commercial finance firms for that matter can be short term or long term in nature. In a perfect world the banks themselves want to pay us consumers low short term rates and lend these funds out on a long term basis at higher rates - just common sense.

How does your firm have input into what rates you will be charged for revolving facilities, asset monetization’s, or term loans. It's simply all about credit quality. So being credit worth as it pertains to being profitable, having a historical borrowing record, and having solid financials, or being in business a long time counts.

Thousands of firms borrow outside of the banking system for business needs. Here solutions for working capital and asset monetization abound - they include:


A/R financing

Securitization

Inventory Finance

Franchise Financing

Asset based non bank lines of credit

Tax Credit Monetization

Mezzanine financing

Equipment financing and Sale Leasebacks

ETC!

In non bank financing rates are higher typically because more risk is taken on by the finance firm, and transactions are more structured in nature. That might include deposits, outside collateral, warrant plays, etc.

Your business in fact does have an input into rates - first of all simply because Canadian business financing is competitive, and your ability to demonstrate growth, prospects, good mgmt, and assets will turn the odds of better borrowing rates in your favor.

If you're focused on the truth in bank business loan and borrowing rates in Canada seek, including options for commercial loans seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you map the road to lowest cost/maximum benefit.







Stan Prokop - 7 Park Avenue Financial :

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 in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian Business Financing Expertise






Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Bank Business Loan Needs. Approval Is Not A Myth And Non Bank Financing Loans And Alternatives Exist

Business OPM And Your Company



OVERVIEW – Information on getting a bank business loan in Canada. Other types of financing loans and asset monetization are also available as alternatives



Bank business loan needs in Canada. Whether it's operating capital or financing loans that are ' term' in nature the ability to access 'OPM' (other people’s money!) remains a constant challenge for the Canadian business owner and financial manager.

You don't necessarily need a business plan when it comes to sourcing Canadian financing, but you do require what we could simply call a clean loan package when it comes to accessing chartered bank capital. (Business plans relate more to start up financing or equity investments)

We spend a lot of time with clients on the subject of choosing the right bank. Invariably we think they have got it wrong. They're focusing on a logo as opposed to choosing the best business banker that suits their needs.

Truth be told the Canadian owner/manager has an easier job than our U.S. counterparts searching for the right business finance solutions. Why is that? Simply because our system has it narrowed down to a handful of chartered banks and occasionally a Credit Union or Non Schedule A bank. In the U.S. the myriad of banks within their system make it challenging - they have to rationalize ' money center banks ', 'Savings and Loans ' , 'Regional Banks ' , Community Banks,' etc !

There's a tremendous difference in Canada between retain banking and commercial banking. It's important to focus on the services of commercial bankers, as the lines can easily blur in the SME sector around how business financing is collateralized. We constantly stress to clients that it's important to separate their personal and business finances when it comes to operating and growth capital.

We meet many owners who tell us they have a business line of credit. They're quite surprised when we demonstrate to them that the ' business financing ' that they have in place is essentially lending based on their personal assets and personal credit history.

There are some key factors in choosing bank business loans and financing. While convenience re: geographical location is important it should never be at the expense of losing a strong commercial banking relationship you have in place. You'd be surprised how far we would recommend driving to get the right banker! So bottom line, focus on the relationship, not the fees!

Revolving lines of credit are key to any growing firm’s success. They help balance out the investment you make in A/R, receivables, equipment, etc. One of the truest maxims in business banking is that banks only lend generously when your firm needs the funds the least. So here the concept of putting revolving credit facilities in place when you might not necessarily need them is critical!

The 4 C’s of credit remain a true constant in lending. They are especially true in the SME sector, and they are character, capacity, credit, and collateral.

Bank business loans typically come in two categories:

Debt
Revolving Credit Lines

Bank credit lines, when you qualify, are low cost and cheaper than pretty well all types of financing. In Canada business owners in the SME sector access capital via a combination of means. They include:

Personal finances
Business credit cards
Vehicle loans
Equipment leases

Other alternatives exist for Corporate Canada when bank financing is either not enough of can't be accessed. That includes:

Non bank asset based credit lines
Equipment leases and loans
Receivable financing
Tax credit financing (SR&ED R&D Finance)
Government SBL loans

We highly recommend working with a trusted, credible and experienced Canadian business financing advisor




Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 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 re: Canadian business financing & contact details :


7 Park Avenue Financial = Bank Loan Expertise



CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com














Stan Prokop

SME Commercial Finance . Beating The Challenges Of A Bank Business Loan In Canada

Is Canadian Business Financing Giving You That Weight Of The World Feeling?


OVERVIEW – .Information on SME commercial finance in Canada . How does the Canadian business owner/manager access a bank business loan and other commercial non bank financing solutions . What works .. when?




SME Commercial Finance. And by the way, what's a SME. As most of us know it’s the Small and Medium sized enterprises in Canada. Various definitions exist about the maximum size of these firms, which is usually related to employee headcount - All we know is that the ' SME' sector drives 50% or more of the entire economy of Canada.

That brings us around to the bank business loan, which is often the ' go to' strategy in the business finance challenge. Are the banks lending to start up, small and medium enterprises in Canada? They are of course, if we are to believe their websites and TV commercials!

No one disputes the strength and flexibility and pricing on Canadian chartered bank finance solutions. They are bar none the best. More often than not we think the consensus is that it’s larger corporations and public, more 'liquid' companies who seem to be benefitting from all the action. A lot of non bank commercial asset and working capital solutions are being delivered by commercial finance companies, leasing companies, etc.

One of our favorite U.S. pundits makes a strong statement on this whole issue; he recently stated that a firm’s ability to continue to generate profits and more profits and improve cash flow in fact should not have the business owner and financial manager focusing on rate.

So how does the business owner approach the whole bank business loan issue? And by the way, in many cases it’s a case of being approved for bank financing, just not enough! which is a common issue.

The actual timing of getting bank financing often is a challenge. When there’s any current economic or ' market conditions ' issues, for example the 2008 world wide collapse the timeline, shall we say... lengthens!

So how does the SME sector approach the whole issue of ensuing that current and future financial needs will be taken care of? You can start by asking yourself some key questions, such as:

Do we really understand our financing requirements? Is it a question of new debt, term loans, or monetizing current assets into cash flow? All of these come without the expense of selling or giving up more equity ownership.

How long will we need these finance requirements?

Do we truly understand the benefits, rates, payout provisions, and credit criteria and covenants related to any specific type of financing?

What bank or non bank finance can we tap to secure the financing we need, and who can help us?

Oh yes... can we reasonably expect to be approved?


In the real world (that’s where we work daily) it's all about what industry you are in, the experience of your management, and the quality of your financials as they relate to balance sheet strength and profits, or lack thereof! Remember also that each type of financing is going to come with different financial covenants and conditions.

Don't forget to consider what also happens when you achieve the wrong type of financing, or are locked into a finance solution you can't get out of. All of a sudden competitors attack and you're vulnerable.

When you are testing the market for a bank business loan, or a non bank financing solution (there are many!) consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can help you with that ' weight of the world ' feeling when it comes to Canadian business financing solutions that you need today .. and tomorrow.



Stan Prokop - founder of 7 Park Avenue Financial –
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 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 re: Canadian business financing & contact details :


SME COMMERCIAL FINANCE BUSINESS BANK LOAN










7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com















Stan Prokop