YOUR COMPANY IS LOOKING FOR FINANCING ALTERNATIVES!
Alternative Financing for Canadian Businesses: Exploring Unique Options for Business Funding
WHAT TYPES OF FINANCING DO YOU NEED?
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Financing & Cash flow are the biggest issues facing businesses today
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
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Innovative Financing Options for Canadian Business Owners: 7 Alternatives to Traditional Bank Loans
Business finance alternatives actually depend on one key thing. Know what that is? It comes down to knowing where your company is at regarding its stage of growth. That's a long spectrum as financing alternatives start way back to business start-ups, established small businesses and all the way to mature businesses that have stopped growing and might be generating all the cash they need and even exploring venture capital as an exit strategy.
The business owner/entrepreneur in Canada knows very well the challenge of raising capital - while a bank loan via Canadian banks is the ' go to ' option that is always top of mind, bank financing is not always available for businesses - There are alternative financing methods that will in many cases be a better fit to your business needs.
WHAT IS ALTERNATIVE BUSINESS FINANCING?
Alternative financing is any type of business financing outside of traditional financial options via banks and other commercial lending financing institutions. Businesses should be aware of their options when financing cannot be achieved based on issues such as lack of business credit history, lack of assets, cash flow challenges
Alternative finance solutions appeal to business owners as interest rates are becoming more competitive in the alternative lending landscape and credit approval is quick and easy to achieve versus bank timelines for approval
SOLVING THE SME / SMB BUSINESS CAPITAL CHALLENGE
The business owner's key challenge is not to give up an ownership stake while at the same time achieving the business capital funding the owner/manager needs to run and grow the business.
MANAGING FINANCIAL STRESS IN THE BUSINESS
In some cases, the company and business owner might be challenged and undergo financial stress concerning debt load, lack of cash flow, etc. That's why it's important to know your financing option/options while understanding where your firm's journey to business financial health stands.
WHAT ARE YOUR ALTERNATIVES IN BUSINESS FINANCE
Bottom line - there are business financing alternatives! Many firms find themselves in a position that yields a double-edged sword - they are growing too fast, and business feels good, but... they are constantly out of cash. One of the most common solutions to that problem is asset-based lending, which typically means considering the move to non-bank asset-based lending solutions versus bank loans - And there are several of them -
7 TYPES OF ALTERNATIVE FINANCING FOR SMALL BUSINESSES & THE SME SECTOR IN CANADA
They include:
Non-bank business lines of credit
Basic A/R or Inventory Finance / Invoice factoring / Invoice financing ( As a funding option, the financing of outstanding invoices is currently the most popular method of short-term finance for financing small businesses in Canada )
Purchase Order Funding
Tax Credit Finance
Sale-Leaseback
Short-term unsecured working capital loans / Merchant Cash Advance / Business credit card for small business expenses - Short-term loans are popular because they provide quick access to capital with a streamlined approval process and funding availability within a matter of days - Formulas for approval around these types of loans are based on sales revenues and owner personal credit history - One caveat on these loans is the higher interest rates compared to a bank loan
Term Loans (Cash Flow-Based)
As you can see, there is a lot of flexibility in mixing and matching alternative financing solutions.
GOVERNMENT LOANS AND BUSINESS GRANTS
Government-guaranteed loans are available for Canadian business owners and entrepreneurs, the Canada Small Business Financing Program is the most popular government-funded program in Canada, along with the SR&ED Program. These two programs provide billions of dollars of financing for business owners annually for startups and established businesses.
Talk to the 7 Park Avenue Financial team about how we can streamline your approval for Government Small business loan financing, as well as financing sr&ed tax credits.
Government grants are also popular because they do not require repayment but grants are difficult to access and can be time-consuming relative to the application process.
TURN TO THE 7 PARK AVENUE FINANCIAL TEAM FOR SOLID BUSINESS FINANCE ADVICE
Naturally, many business owners and financial managers face a conundrum that is even more simple - they don't know where to go or who to talk to for assistance in evaluation financing solutions. They are busy running their company and aren't dialoguing with lenders at either banks or commercial finance companies!
Remember also that when it comes to traditional financing, the credit scores and owner's personal poor credit history of small business owners are often key discussion points and will affect final interest rates.
WHAT ARE THE REQUIREMENTS FOR BUSINESS LOANS IN CANADA
Many types of finance require and certainly are helped by a business plan. 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders in Canada. The type of business funding you need will always dictate the requirements and guidelines for applying, and you may want to ensure you understand the qualification requirements for the type of funding you need. Small business loans for startups require a more in-depth loan package.
HOW IMPORTANT IS EXPERT ADVICE FOR THE FUTURE OF YOUR BUSINESS
That's, of course, the reason why companies can benefit from a business financing advisor - they are guaranteed to understand the full spectrum of alternative business funding. Suddenly they can see answers to challenges such as taking on major new contracts or offering clients extended payment terms.
MANAGING A TURNAROUND
A company experiencing severe financial stress can also utilize a business advisor to see the way out via a restructuring and refinancing process. It would help if you made sure any plan to restructure can be properly implemented based on current lenders, supplier needs, and a careful review of finance options.
THE STARTUP CHALLENGE
Businesses that are start-up in nature or generate their first revenues can benefit from non-traditional funding sources. Solutions that aren't business startup grants, such as Government Guaranteed Small Business Loans, Equipment Financing as an alternative to loans, etc., are tried and true solutions for startups. These are some of the top startup options for financing small businesses in Canada.
PERSONAL GUARANTEES, ETC!
A good credit score and personal credit history of owner/owners is a large part of Canada's small business financing. A repayment schedule tailored to your needs is typically based on a 2-5 year term loan structure. Small business loan requests can be a daunting task for many business folks, so let the 7 Park Avenue Financial team help you when you need it most. On occasion dealing with a traditional bank or dialoguing with finance companies is not for the faint of heart. You want your best interests and needs respected when it comes to not paying a higher interest rate or providing outside collateral, etc.
ARE YOU LOOKING FOR A BUSINESS FINANCING EXPERT? NOT GOING THE VENTURE CAPITALISTS ROUTE/FRIENDS AND FAMILY /ANGEL INVESTOR / CROWDFUNDING PLATFORM / P2P LENDING ROUTE ?!!
Some businesses turn to venture capitalists and angel investors/ private equity investors, etc to fund their businesses, In return for this type of funding for your business the business owners must be prepared to give up substantial ownership equity in the business and a strong growth plan must be in place - The equity investor, unlike a debt finance solution, will also look for an exit strategy of some sort.
While venture capital is abundant and no interest rates or no required repayment are attractive the business owner must be prepared to give up substantial control of the business - The business must ensure that is can scale quickly to achieve the returns required by equity investors.
CONCLUSION - ALTERNATIVE SOURCES FOR FUNDING BUSINESS GROWTH
There are numerous reasons why your business might want to consider alternative financing sources versus traditional financial institutions.
For real-world funding solutions, speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your business funding needs. Let our team help solve your cash flow problems with finance business decisions for financing a business that makes sense for your firm and industry.
FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
What are some options for financing a business?
Options for financing a business include:
Self Financial via the own money of the business owner/ entrepreneur
Friends and family loans
Crowdfunding/Angel investor's equity partners
Government Small Business Loans / Government grants
How do you fund a business expansion?
Business expansion can be funded via:
Business loan debt financing
Government business loans
Equity partners
Self-funding via owner equity or the cash flows of the business
What is the most common form of financing a business?
The most common form of financing a business is debt financing via banks or other commercial lenders - The alternative to debt financing is equity financing via the sale of shares in the business - Debt financing is the cheapest form of business capital and allows owners to retain control and ownership of business operations
Click here for the business finance track record of 7 Park Avenue Financial
