Business Loans And Bank Line Of Credit Options In Canada

Canadian Bank Financing Solutions And Alternatives ( The Elephant In The Room )

OVERVIEW – Information on the role of bank and commercial financing companies in Canada for business loans and the search for a bank or non bank line of credit in Canadian business financing needs

Business loans or a bank line of credit have Canadian business owners and financial managers facing a double edged sword - We're calling it ' choice ' and ' challenge ', and the current popularity of the phrase ' the elephant in the room ' begs the discussion around how business feels about bank and bank alternatives . Let's dig in.

There is a lot of talk among (mostly older!) business people around the ' loyalty ' they have to Canadian banks and other commercial finance sources. Major studies and top experts clearly show that loyalty is declining and the overall experience business has with accessing financing is at a minimum ' troublesome '.

Automization, credit scoring, and digital forms of borrowing have continue to create a maze of both confusion and options for the business borrower. The SME COMMERCIAL FINANCE sector, as well as start ups faces challenges in sourcing a bank relationship manager that can provide capital and revolving credit facilities that meet the need.

While larger ' credit worthy ' customers have access to almost unlimited capital at incredibly low current rates , including the luxury of having banks compete for their business , the start up and SME Commercial Finance sector is often unable to access this capital for credit quality reasons .

This latter group has to gravitate to a number of non bank solutions that provide capital but often have a higher cost - that’s the ' trade off ' - Those solutions include A/R Financing, Inventory Finance, Asset based ABL business credit lines, Tax Credit Monetization Sale Leasebacks, and Purchase Order and Royalty Financing . Companies that have successfully sought these options have provided portions of their assets to acquire the capital they need, notwithstanding that banking is often the ‘preferred ' option. The simple bottom line - Canadian business borrowers are willing to consider options.

We've also dealt with many clients who simply want to change their bank because of either an account mgr relationship issue or loan covenants that don't make sense. (To the bank they seem to make perfect sense!)

Price and costs of finance is often the key motivator in changing a bank relationship. The challenge of the bank relationship manager is to sell a total value added relationship , which can often be limited because of issues such as geographic coverage, etc.,

Timing of approval and access to capital is a big issue, many business borrowers simply can't wait for the time it takes for a bank to make a decision - that allows many commercial finance companies that offer other solutions to be viewed as a viable alternative. In many cases such as ABL financing, tax credit finance, PO /Trade finance these firms are highly specialized and viewed as the expert in certain niches.

Many of these non bank alternative solutions also can co exist nicely with a bank relationship - however some can't when it comes to collateral, etc.
If you’ve been reluctant to discuss the ‘ elephant in the room ‘ i.e. the bank or non bank financing solution seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with a total financing package, bank or non bank, that makes sense within your firm and industry.




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 LOAN 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



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Business Loans & Working Capital Financing Options for New or Smaller Canadian Companies

Start Up Anyone?

OVERVIEW – . Information on business loans and working capital financing options for Canadian business entrepreneurs



Start Up Financing ? Canadian chartered banks, usually by virtue of their ‘relationship’ with business owners and entrepreneurs are in a position to pass on valuable financing tips and information on business loans and working capital for start up or smaller firms. Although the banks are a solid source of such information the banks themselves, by virtue of their charters and credit policies, are unable to directly satisfy the financing needs of the customer.

Business owners are often therefore encouraged by banks to ‘self finance ‘the venture via equity or owner capital and commitment. It is clearly a misconception that banks play a key and major role in the financing of new ventures. Possibly the only exception to this statement is the fact that the banks offer up, in their role as administrators, the Government Small Business Loan, which is a Canadian federal government program providing loans up to , in some cases 500,000.00$ for purchase of real estate, business assets, or leasehold improvements . (The more typical loan amount maximum is 350,000.00$)

We may or may not agree with Canadian banking policies on start up and young venture financing, we should however appreciate the banks stance – they are lending out our capital at very low rates, with potential to lose the entire investment if your firm can’t repay loans and financing.

How can the small or newer business succeed in financing options? Businesses of the size that we are discussing need thousands, literally millions of dollars of financing to fuel their growth in Canada. In our commentary that we are providing it is important to note that as companies develop along the ‘stage of development ‘timeline they of course have much more access to traditional bank and private equity financing. We are primarily talking about earlier stage companies, who may be still developing products and services and may not be yet profitable as they start delivering and billing for those products and services .

So what are the immediate challenges of firms that are unable to provide traditional financing and what are, more importantly, some immediate solutions?!

The challenges tend to be painfully obvious to the Canadian business owner or financial manager that has worked to get traditional bank and equity financing. They are as follows:

Perceived industry or product risk
No collateral
Uncertain financial projections
Limited Performance history

How can the Canadian business entrepreneur overcome these very traditional roadblocks and challenges? There are a number of ways.

First of all, all alternative methods of financing should be pursuing. Alternative financing methods are most non dependent on the above noted risks and challenges. Those alternative methods of financing might include:

*Business Angels or strategic partners (think suppliers!) for short term arrangements
*Equipment Lease financing
* Sale leasebacks on equipment already purchased and paid for
*Asset based lending arrangements that provide working capital facilities against initial receivables, inventory, and purchase orders (These facilities don’t have the same requirements as banks)
* Sr Ed Tax Credits – Customer who have filed claims can finance those claims for cash
* Invoice / Receivable Financing – Immediate cash for your firm’s receivables (these facilities can be of any size)


In summary, newer or smaller firms fall into the ‘ void ‘ area of financing, where very few traditional financing strategies can be implemented, at a time when cash flow and working capital are most critical .

Business owners should review non alternative strategies which can be of great assistance in early growth periods.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your start up and ' new company ' needs.




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 = BUSINESS FINANCING START UP OPTIONS IN CANADA


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