WELCOME !

Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.



Showing posts with label bank loans for businesses. Show all posts
Showing posts with label bank loans for businesses. Show all posts

Saturday, June 27, 2020

Access Business Loans Via These Alternative Business Financing Solutions


















The best business loans and Canadian business financing options for business owners and financial managers aren't always the obvious ones when it comes to achieving capital needs for your company. If there is any good news in today's highly competitive business environment it is that funding options and a loan alternative are available for everything from startups, growing businesses, as well as financially challenged firms.

Why Is The Use Of Alternative Finance Growing In Canada




Three reasons by alternative lending is booming in Canada :

1.Credit Restrictions from Canadian Chartered Banks

2.Demand for Funding That Is More quickly Accessible and attuned to industry needs

3.Increased Knowledge Around Benefits of Alternative Finance - Studies show that Canadian business borrowing in the past was somewhat skeptical about dealing with non ' bricks and mortar ' financial institutions, but that is changing quickly.

In fact industry statistics from organizations such as the IVEY SCHOOL OF BUSINESS/UNIVERSITY OF WESTERN ONTARIO advise that 867 Million dollars of alternative capital were borrowed via non bank lenders for figures available just a few years ago.


Constant changes in the economy, ( pandemics included !) make it difficult for companies to access the business capital they need. Mainstream financing via Canadian banks etc is not always available when you need it, and alternative methods of financing and the ability to get a commercial loan in canada have almost become an imperative for business owners and their financial managers to inspect.


It is no secret that many industries have unique financing requirements, and even within industries, no company might have the same needs - hence our focus on ... options!

So what in fact drives the need for financing? It typically comes down to the longer-term goals of your company, the size of your business, and the overall 'risk rating' that both traditional and alternative lenders use to provide their capital to your company.

KEY POINT - When it comes to SME COMMERCIAL FINANCE options at 7 Park Avenue Financial e strongly recommend that business owners separate their business and personal credit. Although traditional banking does, in fact, focus on the reflection of your personal credit history as a measure of how you will handle business affairs it is still appropriate to have commercial lenders draw on credit info from business credit bureaus such as Dun and Bradstreet - building business credit and being able to demonstrate proper financials and a business plan and cash flow projections goes a long way to business financing success.


Business owners typically gravitate to term loans - it's a common form of loan that at its basics requires you to make monthly payments over a pre-determined period - typically 2-5 years. These days many clients we speak to are looking for short term working capital loans, typically covering temporary shortfalls or unique situations. These loans are very popular, readily available, and even more good news, quick to close, often in a matter of a week or two.

Those short term working capital loans and financing loans compete directly these days with traditional banks, who of course have better rates but harder approval criteria. Often no hard collateral is required, just the 'promise' of the business and business owner to pay. Typically these loans are for 10-20 percent of your annual sales volume, as a guideline to keep in mind.

Government guaranteed start-up loans are also popular. The government is committed to billions of dollars in these loans every year in Canada. Repayment is long, and covers 3 assets you can finance - equipment, leaseholds, and even real estate! The downside - those great rates and terms and flexibility come with an application process that can be cumbersome if you don't have the expertise of an experienced Canadian business financing advisor.

Businesses run day to day on credit lines, typically secured by receivables and inventory. Asset based lenders provide non-bank lines that offer generous borrowing margins.

Other Alternative business financing and immediate sources of business funding include:

Short Term Working Capital Loan ( Also called 'MCA's or Merchant Advances )

These loans are usually very quickly available with the main criteria for approval focusing on your years in business and loan amounts geared to your annual sales, typically in the 15-20% range. The personal credit history of the owner/owners is also a data point considered for funding. Loan repayments are typically spread out over a year and are often customized to your cash flow receipts from cash and business receivables. Interest rates are higher but flexibility and quick access to capital is the key benefit . Those are often the key benefits to any alternative lending solution .

Receivable Financing


A/R financing is a mainstay of alternative business financing. Financing is based on a high percentage of your receivables, typically 90% which is significantly higher than Canadian bank receivable margining policies. Rather than an ' interest rate ' per se commercial receivable finance funders charge a fee, typically in the 1.5- 2% range.

Firms with good gross margins who can easily absorb a 1-2% reduction in their profit margins can find themselves virtually becoming an automatic cash machine as they generate cash at the same time they create and grow sales revenues. It is generally improper to compare this type of financing to a bank business loan as the interest rates and fees are not a ' apples to apples ' comparison.

Receivable financing facilities can be stand-alone, or combined with other financing, such as an asset based line of credit that allows you to borrow under one facility based solely on your assets and sales. At 7 Park Avenue Financial we recommend that is a sole stand alone facility is used a CONFIDENTIAL RECEIVABLE FINANCING solution be implemented, allowing you to bill and collect your own receivables while reaping all the benefits of a/r financing/factoring.This financing is not a working capital loan that brings debt to the balance sheets, it's simply a monetization of your current assets.

Note that you can even finance a business purchase with an asset based loan.



Purchase Order funding
/ ABL Asset Based Lines Of Credit - These credit line and sales financing solutions are focused on business sales revenues and current and fixed assets. Much less reliance is placed on balance sheet ratios, covenants, outside collateral, personal guarantees, etc, often demanded by more traditional lending institutions.




Equipment Leasing / Equipment Loans / Sale leasebacks


Equipment loans and lease financing solutions are utilized by the majority of North American businesses to acquire both new and used assets. Business owners are sometimes surprised that used assets can also be financed, as long as they are acquired from another business or distributor, not via a ' private sale '. Business borrowing via Sale leasebacks can generate working capital for assets your firm owns outright, including real estate.

Equipment lease approvals are based on your ability to meet the monthly payment with respect to your cash flow, as well as being able to demonstrate the asset financed is a benefit to your business. The asset/equipment is of course the main collateral for the le assets. It is often recommended that you discuss with your accountant the lease vs. buy and the lease vs. loan business financing decision.


Government Of Canada Small Business Loan Program
- Small Business Loans Canada

Although a mainstay of traditional banking many business borrowers are not familiar with the program and have a challenge in locating a banker who will work with them on this government-guaranteed loan. The formal name for the program is the Canada Small Business Financing Program
and allows small businesses, including startups to get 'traditional bank loans ' based on a guarantee the federal government, via INDUSTRY CANADA, provides to the banks.

Loans are up to $1,000,000.00 which is hardly ' small ' and over the last decade over 60,000 loans have been made under the program. Any new or established businesses under 10 Million in revenue can apply. AT 7 Park Avenue Financial we work with clients to ensure a speedy approval without missteps typically associated with bank borrowing - so we work with clients on a business plan, cash flow, company history, management overview, etc.

That business plan and other info help assure a speedy response and approval. Business owners borrowing under the program must have a decent credit score in the 650 range per Canadian credit bureaus such as Equifax.

It is very important to note that these ' SBL ' loans ' can only be used for equipment and leasehold interests and real estate. Unlike the U.S. counterpart in the U.S. it is only focused on those 3 asset categories and can't be used for cash flow, working capital, r&d, inventory, etc. Loans to buy a business in Canada are often utilized under the Govt SBL program.

Many franchise financing needs work very well in this program. As well rates are comparable with Canadian bank interest rates and terms vary from 2-5 years. A business start up loan is often the best way to utilize the program.


Statistics show that more and more Canadian business owners are understanding the various business finance options available to them. As opposed to taking to numerous commercial lenders it makes more sense to talk to a proper business advisor around types of financing, costs, and conditions. Canadian business has been somewhat slow to adopt alternative financing compared to ur U.S. counterparts but for those willing to investigate options there are numerous opportunities to finance your growth and operating needs.



Similar to bank loans for businesses and other mainstream financing alternative funding sources all have their benefits and potential drawbacks if not accessed properly, and for the right reasons - so investigate the options that best suit your firm's immediate needs. Seek out and speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of success.





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




7 Park Avenue Financial/Copyright/2020
































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




7 Park Avenue Financial/Copyright/2020























Access Business Loans Via These Alternative Business Financing Solutions













Tuesday, May 26, 2020

Working Capital Finance Solutions & Bank Alternatives !















Benefits Of  Financing Alternatives Vs. Traditional Bank Loans


What Is Working Capital? How To Find Alternatives To Bank Financing



Canadian business owners and financial managers seeking working capital finance by banks or other sources are generally experiencing growth in sales and profits. That's the good news, which is of course offset by the fact that this type of success requires additional working capital and newer ways to finance your business. Putting working capital to work enhances your firms value when return on capital is higher than your cost of financing!


Liquidity has become the name of the game and ' cash is king' even today never seems like a worn cliché.  Past studies by the Conference Board of Canada indicated that the key worries of business owners were working capital cash flow. (Also referenced were ' regulatory issues and competition'). The bottom line is: business owners and their financial managers want options


So you have sales and assets... but can those assets generate working capital finance by banks or other alternatives?

The ability to secure funding at critical times is always challenging for entrepreneurs, even in established companies. That one of the biggest reasons that alternative funding has risen to so much prominence. A wide variety of finance solutions is now available to the Canadian business owner - solutions that involve cash flow financing via the monetizing of current assets such as inventory and receivables, monetizing future sales ( merchant advance/short term working capital loans), equipment financing and sale-leasebacks, and traditional cash flow term loans, also known as ' mezzanine financing '.


Somewhat remarkably many businesses have even turned to online borrowing solutions in Canada. Canadian chartered banks have also participated in the online borrowing industry, although reviews of customer experiences in business journals such as the GLOBE &  MAIL and NATIONAL POST have met with some lacklustre customer experience. Although approvals are relatively fast interest rates and borrowing costs and terms of repayment have left many customers wanting better solutions.

In online borrowing models, including peer-to-peer loans significant emphasis is based on owner personal credit history. Alternative funding options are continually changing in the digital space and borrowers are well advised to speak to a business financing consultant in this area. It is safe to say that business owners can't be expected to call and interview all the different online lenders as it relates to loan info, cost of financing, and loan criteria.

The main appeal of short term working capital loans is the emphasis on fast approval, no requirement for additional collateral, and less emphasis on personal credit scores and net worth.


The bottom line is that businesses who choose to grow and that require external funding want to deal with reputable lenders/financing partners. Unfortunately many Canadian firms can't meet the criteria under traditional bank lending policies , even though financing needs are critical to their business.



For working capital purposes it's all about ' current assets ' which include typically receivables and inventory. As you invest in those two assets to generate sales your working capital needs go up, and your ability to manage and turn over those assets plays a key role in the sourcing of working capital by banks, and non-bank institutions.


You should not be afraid to enter into traditional or alternative working capital solutions if you have properly managed current assets - you are simply monetizing for liquidity, and that's rarely a bad thing.  Business owners know cash goes down when you are expanding sales as you invest in assets and resources.


So are Canadian chartered banks the solutions to your working capital needs. Probably, possibly, maybe is our answer, meaning that if your firm is capable of meeting bank criteria for a revolving line of credit your needs typically can be met. Of more and more concern to our clients is their ability to not be able to generate sufficient financing for the sister of receivables, aka inventory!


That then takes us into an alternative for bank financing, which is the fast growing area of asset based financing, in particular asset based lines of credit. These facilities cost more, but give you total margining of the market value of your receivables, inventory, and , guess what, we'll throw in equipment and real estate if you want to temporarily margin them for working capital. And remember, your balance sheet is not taking on debt when you enter into either a bank or alternative asset based line of credit, you're simply monetizing your financials for cash flow.

The reality is that alternative methods of financing are growing more popular - yes they are more expensive, but if your firm generates sufficient margins and return on equity your ability to tap into virtually unlimited working capital can prove to be a very positive experience.

The reality of working capital finance by banks or alternative methods is always the same - you need to determine your asset turnover, there will always be times when you need a bulge in inventory and A/R to fund your growth.

Solutions for alternative working capital cash flow include:


Non bank asset based lines of credit  - These facilities help to smooth out what the pro's call the 'operating cycle ' of your business , assisting those times where cash inflows don't match outflows based on a/r and inventory turns. As you invest in current asset categories of receivables and inventory you experience a decline in cash reserves. Businesses with seasonality or ' bulges' of sales activity require solid business credit lines. 'ABL' ( Asset Based Lending ) lending is true collateralized lending.




The operating cycle may cause businesses to experience shortfalls for a specific period. There are numerous reasons why this can happen, but one underlying reason is that a business may extend credit to its customers to attract more business. The more credit a business extends, the less cash is available during that time. That’s why a line of credit can help these businesses with their cash flow management.

A/R Financing/ factoring (We recommend Confidential Receivable Financing)

Accounts receivable finance is one of the most highly utilized and successful forms of non bank working capital financing. This type of financing allows you to, in effect , sell your invoices to generate cash flow. Many business people don't understand this type of funding is not a loan, in effect its a transfer and cash flowing of your asset - A/R! 

So pricing is not an interest rate per se, but a discount to the total value of your invoice, typically in the 1-1.5% range.  We recommend confidential a/r financing, allowing you to bill and collect your own accounts with no intrusion of any finance firm into your customer relationship.



Sr & ed Tax Credit Bridge Loans

Sale leaseback solutions

Inventory & Purchase Order Financing

Loans for professional practices ( Doctors/Dentists/Lawyer/Accountants, etc )  - These loans may involve financing needs around equipment, marketing,  or in some cases acquiring another practice. Expansion for business real estate is also a common need in this area.




Short Term Working Capital Loans ( aka ' Merchant Advances ) - As we have discussed to a certain degree these online/peer-to-peer solutions became ultra-popular after the 2008 recession and became a strong competitor to invoice discounting finance. Loans are typically based on a percentage of annual sales, typically between 10-20%. Although readily accessible we consult to clients around the pros and cons of this financing, one issue being higher interest rates.

It is important to understand the financial concept of matching when it comes to working capital finance solutions. These sources of capital should be used for day to day operating needs.  Serious mistakes occur when these types of solutions are used for long term need such as investments in equipment, r&d,  marketing, etc.

At 7 Park Avenue Financial we find that many new clients are confused around some of the terminology around the ' working capital loan '. Also noted is that certain loans in this category are secured, others are not.

Is Alternative Financing Right For Your Firm?

Business financing is a challenge, so owners must invest their own time, or work with a trusted advisor to evaluate options. Companies with good sales revenues, profits and clean balance sheets will have more options, but we have demonstrated that commercial lenders providing alternative finance options are plentiful and offer numerous cash flow solutions to your short term needs. If your firm has sales, and or assets you have non bank funding options.


Liquidity, that's what it's all about. Speak to a trusted, experienced and credible Canadian business financing advisor in order to ensure your traditional and alternative business financing options are first, clear, and second, available!





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.










7 Park Avenue Financial/Copyright/2020












Working Capital Finance Solutions & Bank Alternatives !