Traditional Versus Non-Traditional Financing - What Are the Differences?

Tweet

Business owners at either start up or sometime in the business existence need financing. Many a joke has been offered regarding financing offers when you don't need it, however if you need financing to survive that becomes a different story. Business owners must be able to assess whether they are candidates for traditional or non- traditional financing. Traditional lenders want to grow your business; they are not looking to fix your problems. When business owners have to attract additional equity the problem usually is that they have to give up a healthy piece of the ownership of the firm. So who are these 'Traditional 'lenders? It is essentially a short list:

Banks and Trust Co's
Independent Finance companies
Venture Capitalists /Private Equity Firms
Government

Let's discuss some of the basics of those traditional players. Banks are the most obvious of all traditional lenders - they focus on assets and collateral and personal guarantees of the principals. If a firm cannot meet their lending criteria it's three strikes and you are out scenario. Venture Capital firms look for healthy portions of a firm's equity. They want big gains over a longer period of time. Generally venture capital deals are very significant in dollar size. These funders are very professional and have deep pockets, backed often by large institutions.

We feel strongly that the biggest mistake firms make when contemplating venture capital is either the small size of their transaction, or that funds are being solicited for the wrong reasons. Independent Finance firms are largely collateral based. Rates are typically a bit higher than bank type rates, and specialties include leasing and asset based lending, as well as non bank working capital arrangements, commonly called ' ABL''s. Various government loans and grants are available to business borrowers. They have very good rates and good structures - the main complaint of borrowers is time to consummate a transaction. Non- Traditional Lenders: This group can be categorized in 4 categories.

Employees
Friends/Family
Private third party lenders
Suppliers

Most business owners do not realize key employees are often an untapped source of capital. They have a vested interest in their employment and careers, and often want to be considered for ownership and in succession scenarios. Management buyouts are a very common and quite successful strategy. Friend and Family is of course a sensitive area - we all know comments made around mixing friends, family and money. Care is required in this area.

Most business owners never consider suppliers as a form of potential capital. This group has a vested interest in making your firm successful - your firm is a customer, and they quite often can see the advantage of some sort of strategic alliance. Even a simple restructuring of your payments to a key supplier can bring valuable capital to your firm. In summary, there are various sources of traditional and non-traditional funds available to business owner. They certainly are not unlimited in choice, and every business has a unique need and situation that requires a special focus and assessment.

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

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 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.
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 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












Article Source: http://EzineArticles.com/3645694

Business Finance Sources And Commercial Financing In Canada Canada : High Stakes And Higher Rewards

Business Financing In Canada : Let’s Play Ball

OVERVIEW – Information on business finance sources in Canada . Commercial financing has more baseball similarities than you might think !

Business finance sources in Canada are quite akin to some solid baseball analogies. While that might be missed by some consider the following -

Stepping up to bat

Getting to first base

Rounding Second

Home Plate = Success

Sliding into home plate

highlights the risk and yes, high rewards of financing achieved properly.

Commercial financing still presents a huge challenge to firms all the way from start up growth in the SME sector. Let's explore that analogy, allowing your company to ensure its one of the ' good players'. Let's dig in, or should we say ' let's play ball'

Unlike many sports that allow you to practice and get it right many poorly chosen business financing options can quickly take you down the wrong road. At the same time though preparing properly for the financing you need
is in act a key ingredient to business survival and success.

So... stepping up to bat ... If your firm is either in start up , or early revenue phases your ability to explore the right funding options is ' job 1 ". Options for start up rarely include talking on any form of debt, so typical initial financing includes:

Owner equity
Asset monetization - Receivable Financing / SR&ED Tax credit loans
PO/Contract financing

The one solid exception to ' debt financing' for Canadian start ups is the Government of Canada Guaranteed Small Business Loan - aka the ' SBL'. It is available without external collateral to owners/entrepreneurs who have reasonable personal credit history (i.e. Credit Bureau Score = 650+) and does a great job of financing new and used equipment needs, as well as leasehold improvements. Spoiler alert - rates and structures are very attractive and flexible

Trying to get to first base? As your firm gains business ' traction' you're in a position to take some real ' first steps ' in debt financing and asset monetization. These solutions include:

Commercial Bank Financing

Receivable Finance (Factoring, Confidential Receivable Financing)

Asset based 'on bank' business credit lines

Equipment Financing

Working Capital Term loans

Preparation for any of the above finance solutions should include up to date financial statements , aged summaries of a/r and a/p, and , equally as important, a realistic cash flow forecast. Note - Hockey stick unrealistic projections need not apply!

Rounding Second Base? This is always a critical time for business finance choices. Your firm might be in high growth mode, and may well want to entertain finance solutions such as Mezzanine cash flow finance. Alternately your firm may be experiencing severe challenges and may well have to address the need to change from traditional bank type financing to alternate lenders who are willing to take that extra risk. Here things like debt levels, CRA obligations, or the need to ' right size ' your business is key.

The home run scenario:

Canadian businesses that hit home runs have done their best and succeeded relative to financing challenges and mastering the unexpected problems along the way. Unfortunately business is never about just ' one swing of the bat ' for a home run, so if you want to ensure reaping the high rewards of a properly financed business at all times seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can ensure ' strike outs' are kept to a minimum and chances of business survival and success are maximized. Batter up!

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 100 Million $ of financing for Canadian corporations . Info /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 '

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

Business Finance Sources In Canada: Tragedy Free Funding & Loan Solutions

Experiencing That All Talk And No Action Feeling In Business Financing Needs?

OVERVIEW – Information on how Canadian business owners can address the need for financial solutions via loan and funding needs. Business finance sources have evolved into two channels, traditional and alternative . Which one makes sense for your firm ?

Business finance sources in Canada , when it comes to various types of loans and funding can easily leave owners/financial managers with that feeling of a ' lot of talk and no action' relative to their particular situation . Rather than view this as a ' tragedy'

in the making isn’t it good to know that currently choices for financing your business have never been better, and there are some solid reasons why! Let's dig in.

A recent (U.S.) stat indicated that banks are currently funding 2 in 5 requests for business credit as it pertains to the small and medium size lending space. Suffice to say that many non bank lenders and commercial finance companies and lease companies are approving many more transactions as a percentage of applications than that.

Bank credit of course is the lease expensive and most flexible for those firms that qualify. That, coupled with the strength and dominance of the Canadian banking space makes it a great place to borrow for qualified applicants that can demonstrate good balance sheets, profits, and cash flow. There's no question that the bank ' cash flow tap ' is on these days to qualified borrowers. Challenges here include finding the right banker and ensuring your firms’ company/industry needs are understood.

Our firm has observed on many an occasion that many borrowers stay with their banks and low rates even at the cost of not having all the capital they need simply because of the higher cost of alternative business credit.

These exists though a large gap in the number of business borrowers to need an ' alternative market ' when it comes to borrowing needs. That has given rise to a very robust non bank industry that typically provides for higher borrowing costs but provides greater access to capital. Those firms provide financing in areas such as:

Receivable finance

Inventory Financing

Equipment financing/leasebacks/asset based bridge loans

PO/Contract/Royalty type finance

Business credit lines based on business assets - ' ABL’

Refundable tax credit financing

Franchise loans

Unsecured cash flow/mezzanine loans

Also, we often meet firms , either start up, or established already that are unaware of the Govt Guaranteed Small business loan, which provides solid financing terms and structures for asset purchases ( new and used ) as well as leasehold improvements .

These solutions are available everyday and provide millions everyday in liquidity access to Canadian borrowers needing capital.

Business owners/financial managers can do a tremendous amt before borrowing heavily from either traditional or alternative lenders. Staying focused on business planning, cash flow mgmt, current asset turnover ( a/r and inventory ), as well as prudently managing payables all can reduce the amount of short term borrowing you need . The latter, i.e. managing vendors is a tricky slope as it requires that key relationships be maintained with suppliers that are critical to your business.

All the finance solutions we have mentioned are typically shorter term in nature - you will notice they match 'assets ' to short term cash and loan solutions. That's a winning strategy.

If you want to change that ' all talk / no action ' feeling on Canadian business financing needs seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in ' tragedy free' financing solutions that makes sense for you needs today and in the future .



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 100 Million $ of financing for Canadian corporations . Info /Contact :

http://www.7parkavenuefinancial.com/business-finance-sources-funding-loans.html





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
























Stan Prokop

Business Finance Sources : We’re Name Dropping On Financing Options

Getting It Wrong In Business Finance Is Not An Option

OVERVIEW – Information on business finance sources in Canada . Avoid these financing options pitfalls with careful planning and expert assistance





Business finance sources in Canada can, unfortunately come with pitfalls if not planned picked or executed carefully. Let's take a look at those financing options while demonstrating that getting it wrong is a costly option. Let's dig in.

Whether a firm's business is in a great economic recovery or even when times are tough any type of business financing is a challenge. Growth? Access to Capital? Cost of Financing? All of those play into the business owner/ financial manager challenge.

While ' low cost' financing seems logical to every applicant the reality is that low rate financing is typically only available from our Canadian chartered banks. If your business can't meet the hurdles imposed by banks (the holy grail of profits, clean balance sheets, strong cash flows)

then it becomes a question of will your business make it with alternative finance solutions.











We promised to ' name drop ' on some of those traditional and also alternate sources of capital. They include, but are not limited to:

A/R Financing

Inventory Finance

Purchase Order/ Contract financing

ABL’S (asset based non bank credit lines)

Equipment Financing

Working Capital term loans

Sale leasebacks

Bridge Loans

Tax Credit Monetization

Business owners with needs in SME Commercial Finance also have the challenge of separating their personal and business assets in the area of personal guarantees that are required by many lenders, including the banks by the way.

Many capital needs for your business, whether operating, or term in nature are actually rooted in the need for, or lack of planning. We couldn’t count the amount of clients we meet that often have no knowledge of, let alone actual cash flow budgets.

When you don't know how you'll make loan payments, or take on new or larger orders a downward spiral often starts.


Don't forget also that its not just about accessing new cash, it's also about managing what you've got. Adopting strong metrics in collections, inventory turns, and utilizing equipment financing proactively to acquire new assets (it conserves cash flow) should by your new normal.

Looking for professional help? That might come from your lawyer, accountant, or by seeking a trusted, credible and experienced Canadian business financing advisor who will help ensure that ' getting it right ' is your new strategy for Canadian business financing success.




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 EXPERTISE IN BUSINESS FINANCING OPTIONS





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