Business Financing Alternatives In Canada : Ignore Cash Flow & Working Capital At Your Own Peril!

 

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YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS! 

Boost Your Business's Financial Health: Understand Cash Flow & Capital

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the biggest issues facing business today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop7parkavenuefinancial.com

 

Mastering Working Capital, Cash Flow & Business Financing in Canada | 7 Park Avenue Financial

 

 

The Canadian Business Owner's Guide to Efficient Financing 

 

Tackle the complexities of business financing head-on by reading this article because it offers vital insights into Canadian working capital and cash flow

 

 

The Importance of Keeping the Pump Primed 

 

Business financing in Canada requires that you ensure that the pump is primed! Ignoring the alternatives you have for cash flow and working capital is done at your own peril, especially in today’s ultra-competitive environment. We thought that the priming of the pump is a great expression and a good analogy. Let's dig in.

 

 The Origin of the "Priming the Pump" Phrase  

 

Humorously Donald Trump actually said he invented the phrase! (“Have you heard that expression used before?" Trump continued. "Because I haven't heard it. I mean, I just ... I came up with it a couple of days ago and I thought it was good. It's what you have to do."

 

But the term is most often associated with 20th-century economist John Maynard Keynes, a giant of the field and a favourite of liberals who favoured government spending. 

 

Key Role of Working Capital and Cash Flow

 

Access and management of your working capital and cash flow play a key role in business financing and your firm's growth and overall well-being. No one ever argues with us on that one.

 

Understanding Business Growth Financing

 

Your ability to get financing on items such as fixed assets, a/r, and inventory will ultimately depend on how successful and how fast your company can grow.

 

Clients are somewhat amazed when we tell them that we can pinpoint the exact time when they will stop being successful!

 

What do we mean by that? Simply that you have a great little tool to determine when you need that extra capital in your business. Most small and medium-sized businesses haven't heard of it, but we can assure you that larger more sophisticated corporations have a total handle on this one.

 

The Sustainable Growth Ratio

 

So what’s the tool - it's called the Sustainable growth ratio and it's a simple formula that shows you the most your firm can grow without bringing in new capital.

 

For example, if you want to get a shareholder return on your total capital in the business of 20% you can reinvest all your earnings and keep your relative overall financial position the same. Want to grow faster, and then access more outside capital? Simple as that.

 

 Challenges in Accessing More Capital 

 

However accessing more capital from the viewpoint of our clients is either difficult or undesirable - Most owners don't want to reduce or dilute their ownership interests, etc.

 

Monetizing Business Financing Assets

 

The choice? It's simply monetizing your business financing assets such as receivables, inventory and unencumbered assets and creating working capital and cash flow via asset turnover.

 

You create cash flow financing internally by addressing how you both manage and turnover receivables, inventory, and accounts payable.

 

  

Accounts payable you ask?! Yes, simply because as you slow your payables you generate real cash flow progress. Naturally, there is a fine line here between generating that cash and alienating your valued suppliers!  

 

Real World Solutions to Canadian Working Capital Financing

 

We never want to be accused of talking about the problems and not the solutions, and we mean real-world solutions, not textbook solutions to Canadian working capital financing.

 

Available Alternatives for Cash Flow Financing

 

• Accounts Receivable Financing
• Working Capital Loans / MCA Merchant cash advances
• Equipment Leasing
• Sale leasebacks
• Asset based non-bank line of credit
• SR&ED Tax credit financing
• Mezzanine financing
• Business credit cards
• Purchase order financing
  

    

 

Key Takeaways

 

Working capital is the difference between a company's current assets and current liabilities.

Measures operational efficiency and short-term financial health; ensures the company can fund operations and pay debts.


Cash Flow:

Net amount of cash and cash-equivalents transferred in and out of a business.
Positive operating cash flow indicates increasing liquid assets and financial health; negative cash flow may signal insolvency.

Business Financing:

Ways companies secure funds for business growth, asset acquisition, or covering a company's working capital shortfalls.
Enables businesses to operate, invest in growth, and handle unexpected costs.

Sustainable Growth Ratio:

Formula indicating a firm's growth potential based on current finances without needing extra financing.
Helps businesses gauge growth rates without depending on external funds.

Monetizing Business Financing Assets:

Converting business assets into cash or cash equivalents through sales, financing, etc.
Generates cash quickly, especially when traditional financing is limited.

  

 

  

Conclusion    

 

In summary, we spoke of your desire or inability to attract long term capital to your business, the solution being short-term working capital decisions around how you finance on a day-to-day basis.

  

Call 7 Park Avenue Financial,  a trusted, credible and experienced business financing advisor on how to access the Canadian business financing you need. Today!  

 

  

FAQ  

 

What are some common proactive steps a company can take to avoid working capital issues and a cash crunch?

Here are some proactive steps to avoid common working capital issues:

Regular Cash Flow Forecasting and review of the cash flow statement

Efficient Inventory Management:

Speed up Receivables:

Extend Payables without Straining Relationships:

Maintain a Reserve:

Reduce Unnecessary Expenses:

Manage Debt on the balance sheet:

Monitor Key Financial Ratios:

Diversify Customer Base:

Implement Efficient Systems:

Review Pricing Strategies:

Negotiate Bulk Discounts:

Regularly Review Financial Statements:

Consider Seasonal Needs:
 

 

Why is cash flow so crucial for a business?

Positive cash flow indicates increasing liquid assets, enabling a company to invest, settle debts, and handle unforeseen expenses.

How does business financing benefit my company?

It offers funds to grow your business, buy essential assets, and manage unexpected financial shortfalls.

What is the Sustainable Growth Ratio?

A formula showcasing a firm's growth potential based on its current financial stance without additional financing.

Why should I consider monetizing business financing assets?

It’s a swift way to generate cash, especially when facing challenges in accessing traditional financing.


What are some common sources of business financing in Canada?

Apart from working capital, businesses often explore options like bank loans, venture capital, angel investors, and government grants that can aid in achieving positive working capital.

Are there risks involved with relying too much on external financing?

Yes, over-reliance can lead to significant debt for many businesses, potential loss of equity, or increased financial strain during economic downturns.

How can I improve my business's cash flow?

Strategies to avoid negative working capital scenarios include timely invoicing, efficient inventory management, renegotiating contracts, and exploring quick financing solutions like factoring as a working capital loan solution

What are the differences between equity financing and debt financing?

Equity financing for small business owners involves selling shares of your company to raise funds, while debt financing is borrowing money to be repaid with interest.

Is it advisable for startups to dive deep into external financing?

Startups should weigh the pros and cons. While external financing can fuel growth, it might also entail loss of control or high-interest repayments that don't withstand financial challenges

Click here for the business finance track record of 7 Park Avenue Financial

How To Obtain Business Financing In Canada / From Capital to Success: How Debt Financing Fuels Business Expansion

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YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

Business Financing: Exploring Debt Financing and Cash Flow Solutions

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

  

The Path to Financial Freedom: Exploring Debt Financing and Cash Flow Strategies

 

Business financing in Canada has never been as important as in recent times. A company can fail in the best of times, whether it's poor finance practices around your existing financing strategy or simply the inability or lack of knowledge around business capital, cash flow, and working capital solutions. At 7 Park Avenue Financial, we believe any firm can benefit from a better overall financing strategy.

 

INTRODUCTION

 

Business financing plays a  key role in how your business grows and operates on a daily basis. One aspect of financing your business is taking on debt - Debt finance works in different ways and has implications around costs and pros and cons around balance sheet debt.  We'll take a look at managing debt and costs and look at cash flow and asset-based lending solutions as well. The question of ' How much debt is right for your company is important - here is an article from the Harvard Business Review on the subject.

 

And boy, have things changed! Long gone are the days when funding a company simply revolved around low-interest long-term bank loans, when approval seemed cumbersome but ultimately successful.

 

HOW DEBT FINANCING WORKS  

 

Debt financing is a business financing mechanism that allows companies to raise capital - and requires repayment of a combination of principal and interest. It differs from equity financing which requires giving up partial ownership in the business. Debt financing is generally regarded as a less expensive form of financing than equity.

 

 
THE COST OF DEBT FINANCING   

 

Taking on debt financing that requires principal and interest payments has a substantial influence on a company's cost of capital - Ensuring the business owner understands the relationship between the cost of debt and how this capital is deployed is key to ensuring ongoing profit of the business.  Also, lenders and owners measure the relationship between debt and equity and the amount of debt relative to the company's capital stack- Lower debt is preferable and helps the company ensure future funding will be available for growth and the financing of day-to-day operations. 

 

7 Park Avenue Financial's vision was founded specifically on that landscape that changed. No secret that these days, not all business borrowers fit the mould of traditional financiers such as the Canadian chartered banks.

 

 

DEBT FINANCING AND THE COST OF FINANCE / INTEREST RATES

 

Safe to say that interest rates play a key role in taking on debt in your business. Overall business creditworthiness will always affect the cost of financing and the lowest rate that can be achieved. The ability of the company to ensure it can maintain appropriate covenants and balance sheet ratios is key to how lenders view debt financing.

The right combination of debt and equity will ensure access to capital and the ability to grow cash flow and maintain ownership and control of the business.

 

 

PROS AND CONS OF DEBT FINANCING  

 

Debt financing has several advantages including the ability to use capital for accelerated growth of the business - Interest payments are a business tax deduction and the lower cost of debt financing is preferred over the owner having to give up equity ownership to raise capital.

The challenges of debt funding include the business risk associated with cash flow not being sufficient to make payments which have several negative consequences.

 

CASH FLOW VERSUS ASSET-BASED LENDING SOLUTIONS

 

 

Many cash-flow financing solutions are available withing the asset-based lending business landscape in Canada. These solutions differ from cash flow-based financing and don't rely heavily on projected cash flows - instated they focus on monetizing the business assets on the balance sheet - accounts receivable, inventories, fixed assets, commercial real estate, etc.  Each business will have to determine which option may be preferred over the other.

 

THE ONLINE LENDER OPTION -  BUYER BEWARE!

Many businesses try online lenders - yet while the applications and loan process is viewed as online, there is a distinct lack of personalization that your company and industry might need. Even worse, the multitude of online lenders confuses the business owner, if not downright deception, in a few circumstances.

In the case of the short-term working capital industry, which evolved out of the U.S. Merchant cash advance loans, many Canadian borrowers have found they can approach and get approved by several lenders.. in effect, they ' stack ' new loans on top of each other

When investigating online solutions, we encourage clients to ensure they are dealing with a trusted, credible and experienced Canadian business financing advisor with a track record of business financial success to eliminate any disastrous financing.

A proven solution towards the path of solid business financing is to analyze short and long-term cash flow needs ( a cash flow plan ) that allow your company to understand where liquidity is needed.

An  ' informed ' business borrower armed with proper knowledge of the types of financing and the cost of their financing needs is the best scenario to strive for. In many cases, your industry will typically benefit from many of your competitors' financing types, which can assist your own firm's funding journey.


While many owners/ managers and entrepreneurs in general focus on sales revenue growth as the key metric to success, that motivation has to be complemented with good cash flow management & financing solutions geared to your cash flow and asset monetization needs.


Sales will drive a lot of your financing choices and will, in many cases, dictate or suggest what type of debt finance or asset monetization you will utilize.  While it's important to be optimistic about sales growth, that same revenue issue can be a source of stress regarding cash flow.


One reason why? Simply because building inventories and receivables and investing in new assets are cash uses, not sources, as our good friends accountants would say.

While cash flow and sales budgets are important  and reflect good management  the real world dictates that  Murphy’s law will often kick in, which might mean:

Large New Sales or Contract Opportunities

Seasonal cash flow needs

Loss of a major customer

 

WHAT IS THE BEST SOLUTION TO FINANCE SALES GROWTH

 

ANSWER:  A traditional or alternative business line of credit ( traditional = non-bank)


1. Canadian Chartered banks


2. Non-bank commercial finance asset-based credit lines



It often takes new/used assets to build and grow a business, i.e. equipment, machinery, rolling stock, technology a la computers, software, etc. In that case, equipment lease financing is your best bet as it conserves cash flow and matches the benefits of the asset in question to cash outflows. From start-up to mega-corporations, 80% of all-size businesses utilize lease-based asset financing.

 
 

BUSINESS FINANCING FOR SMALLER/NEW COMPANIES IN CANADA

Newer businesses and smaller businesses, including startups, should consider the Canadian Govt Small Business Loan - aka the  ' SBL ' loan. That loan is guaranteed by the govt and only requires a 10% personal guarantee against the loan, which can be anywhere up to 1 Million dollars depending on the asset you wish to finance. A good owner personal credit score is required.


Cash flow concerns boil down to liquidity.  The 2nd most liquid asset you have on your balance sheet is receivables. Collecting them promptly and financing them properly is key to business success.


For those firms that can't access or get approval for the amount of business credit line, they need numerous solutions are available, the most popular often being  A/R financing via a ' factoring' or 'Confidential Receivable Financing ' invoice financing program. This solution monetizes sales as you generate revenues - instant cash. Key advantages include instant liquidity and no additional debt on your balance sheet and the ability to forecast cash flow needs.


Businesses in Canada's SME sector (small to medium enterprises) will never have too much cash. Increasing sales, buying assets, and hiring people drain cash- sometimes slowly, other times not so slow!


Some other solid real-world solutions to cash flow and loan needs include:

SR&ED Tax Credit Financing


Sales Leasebacks


Unsecured cash flow loans


Short Term Working capital loans

Mezzanine Financing  ( Unsecured cash flow term loans )

 

 

 

CONCLUSION - UNLEASHING THE POTENTIAL OF DEBT FINANCING AND CASH FLOW FINANCE SOLUTIONS  

 

Debt financing of some amount is a critical tool for companies that want to grow - allowing the business to leverage business capital and maintain control of ownership of the business. Accessing business financing at reasonable rates is always more beneficial than equity financing - but the business owners must ensure repayment and debt load can be managed effectively.

 

Many cash-flow financial solutions and asset-based lending combined can help the business manage finance costs and ensure the relationship between debt and equity is optimal and can help sustain the company's growth ambitions.

 

Businesses can achieve these goals by managing cash flow on a day-to-day basis via cash flow planning and sales projections.

Financing a business in Canada, in ordinary or extraordinary times, takes some time, knowledge and access to funding solutions that are in your firm's best interest. Stay educated and ensure you are working with someone on your side when it comes to maintaining finance solutions tailored to your business health.

 

At 7 Park Avenue Financial, we call that ' Financing With The Intelligent Use Of Experience '!

 

 

  

  

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION   

 

 What is the difference between debt financing and equity financing? 

 

 Debt financing involves borrowing money that must be repaid, while equity financing involves selling ownership stakes in the company. Debt financing allows the company to retain ownership control without diluting ownership while leveraging capital.

 What are the advantages of debt financing? 

 

Debt financing allows businesses to leverage a small amount of capital for growth, the interest payments on business loans come with tax deductibility, and the company retains ownership control. It is also generally less costly than equity financing.

 What are the risks associated with debt financing? 

 

One risk of debt financing is that interest must be paid to lenders regardless of business revenue and financial performance via the company's expected cash flows.  This can be particularly challenging for businesses with inconsistent cash flow. Additionally, taking on too much debt can increase the cost of capital and reduce the value of the company when wrong investment decisions are made.

 How does cash flow-based lending differ from asset-based lending? 

 

Cash flow-based lending relies on credit terms around projected future cash flows of a company to determine loan eligibility, whereas asset-based lending considers the balance sheet assets as collateral. Cash flow  lending is suitable for companies with strong projected cash flows but limited physical assets, while asset-based lending is often preferred by companies with valuable assets but potentially tighter margins or unpredictable generated cash flows around cash flow projection.

 What are the factors to consider when choosing between cash flow-based and asset-based lending? 

 

 When deciding between cash flow-based and asset-based lending to borrow money, companies should consider their future cash flow stability, availability of collateral, and their specific financing needs around sustainable growth  Cash flow-based lending may be faster and require less collateral, but asset-based lending can provide access to larger loan amounts based on valuable assets. Companies with consistent cash flow and strong balance sheets may opt for asset-based lending, while those with strong projected cash flows but limited assets may prefer cash-flow-based lending.

 

 How does debt financing affect cash flow

Debt financing can have both positive and negative effects on positive cash flow:

Positive Impact: Debt financing can provide a boost to cash flow in the short term. When a company secures a loan through debt financing, it receives an infusion of capital that can be used to fund operations, invest in growth opportunities, or meet immediate financial obligations. This injection of funds can help improve cash flow by ensuring that there is sufficient liquidity to cover expenses and maintain a healthy working capital position reflected in the cash flow statement

Negative Impact: On the flip side, debt financing requires regular interest payments and eventual repayment of the principal amount. These financial obligations can put a strain on cash flow, especially if the company's revenue streams are inconsistent or there are challenges in meeting the scheduled payments. The outflow of cash for interest payments can reduce the amount of available cash for other operational needs, potentially affecting the company's ability to invest in growth initiatives or respond to unexpected expenses.

Click here for the business finance track record of 7 Park Avenue Financial

Get Your Business to the Next Level: Exploring Different Financing and Funding Options

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YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

From Commercial Loans to Government Funding: A Comprehensive Guide to Business Financing

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

 

Innovative Business Loans and Funding Solutions to Drive Your Company Forward

 

Business financing needs, aka ' business loans'!  in Canada might be requiring you to ' test the water ‘. But the question that begs to be asked by small business owners  is :

"What amount of capital do you require for your company and, equally important, what is the desired or best funding solution".

 

INTRODUCTION

 

Business owners know that cash flow and the right financing solutions are the lifeblood of a business - from startups to established businesses any company that wants to both expand or generate additional cash flows for funding day-to-day operations - Numerous financing options, both traditional and alternative in nature are available for the business loans and funding you need to succeed.

 

Small and medium-sized companies rarely qualify for the venture capital sought by major tech firms, etc - they want ' main street' /'real world' lending solutions. Let's dig in!

 

 

 

COMMERCIAL LOANS FOR BUSINESSES 

 

Most commercial loans are for established businesses that have been in business for years - startup financing is always a challenge in Canada.  Whether it is a startup or a business already doing well financing can help grow and expand while maintaining efficient day-to-day operations.

A commercial loan can be secured or unsecured - secured loans are asset and collateral-based - assets financing includes accounts receivable, inventory, fixed assets and technology,  rolling stock, and real estate.

 

Unsecured loans tend to be cash flow based and can come in the form of unsecured bank lines of credit or cash flow mezzanine type financing solutions that focus on the quality of the cash flows of the business to meet debt obligations.

 

ELIGIBILITY REQUIREMENTS FOR COMMERCIAL BUSINESS FINANCING

 

Business loan requirements will typically include basic information on the business including financing statements and cash flow projections - Often a business plan is required and in almost all instances will help with funding approval. 7 Park Avenue Financial prepares business plans for clients that meet and exceed bank and commercial lender requirements.

 

 

A full-scale business plan might well be required for larger financing - we're typically talking 1 Million ++ $, and that includes solid executive summaries, cash flow forecasts, etc. But in the ' SME “market (small to medium enterprise) (where a lot of action takes place!) that's definitely not necessarily the case.

 

 

We'll point out though that any small business owner/financial mgr in the SME environment who can't provide basic info such as financial statements,  owner info, background story, etc is somewhat doomed to failure in achieving their company financing goals. In some cases, a third-party business financing advisor/consultant might be the best person to move your financing needs forward.

 

Borrowing limits will always be based on the type of financing needed as well as interest rates commensurate with the credit quality of the business.

 

Keep in mind also that whether it’s a small or large amount of due diligence you will always be required to submit a proper application and relevant backup info - For example - aged receivables, payables, articles of incorporation., tax obligations, etc. 

 

The personal credit history of borrowers will always come up in most commercial loan applications, and in small business financing in Canada, the personal credit of owners is closely tied to how they run their companies in the eyes of lenders. Credit bureau scores can be easily checked at firms such as Equifax and a good minimum score tends to be in the 650 range. 

 

 

WHAT ARE THE FINANCING NEEDS OF CANADIAN BUSINESS

 

 

Many companies in Canada are always working on various .. let us call them ' projects ' which require business capital. The challenge is what type of debt capital or cash flow finance will assist them with any particular project. In some cases, it might simply mean complementary funding to existing loans or business credit lines.

 

Although there seem to be more ' service ' oriented companies than ever before thousands of firms continue to have the basic needs revolving around the investment in receivables and inventory they make in funning and growing their business.  Conservation of cash is always important when it comes to running day-to-day operations while keeping long-term goals in mind.

 

 

BOOST BUSINESS GROWTH WITH THE RIGHT FINANCING STRATEGY 

 

 

Many firms like yours might work hard to obtain larger new orders or contracts in perhaps new geographic or product and service segments of your business. Getting those large new orders/contracts places a strain on day-to-day working capital and cash flow needs, so solutions such as purchase order financing or a short-term working capital loan might well be the solution.

 

Other needs for capital might revolve around basic sales and marketing dollars or the ability to purchase additional products at a significant discount when the opportunity arises. We've met many business owners of the years here at 7 PARK AVENUE FINANCIAL who shared with us stories about being able to pay C.O.D. for an order, thereby allowing them to negotiate up to a 5% discount on that prepayment.

 

Let's not forget that your suppliers carry inventory and a/r investments also!    What will always distinguish a company focused on borrowing capital is its ability to show a well-experienced management team and the ability to produce financial reporting as required by any bank or commercial lender.

 

Always ensure you understand the implications that come with new financing when you already have a senior lender in place. The best solution is of course to have a proper ' cobbled together ' suite of finance solutions that bring the desired level of capital and flexibility.

 

AVOID EQUITY DILUTION IF POSSIBLE

 

Debt financing and cash flow financing are non-dilutive in nature - Don't forget that any new owner/equity capital has the effect of diluting ownership - so although debt and cash flow solutions might seem expensive they are always cheaper than giving up equity ownership via the dilution process.

 

Naturally new capital can come in the form of new owner equity (not what we are talking about here today) or debt and asset monetization. ( That's what we're talking about today ), namely true borrowing and working capital solutions.

 

 

DON'T LET LACK OF FUNDING HOLD YOU BACK - UNCOVERING INNOVATIVE FINANCING SOLUTIONS

 

ALTERNATIVE LENDING SOLUTIONS

 

Traditional loans from financial institutions such as banks aren't always accessible by many businesses - As well banks have lengthy application processes and much more strict criteria for loan approval and eligibility. Alternative Financing solutions are available to the business owner for :

 

Refinancing

Cash Flow Moneitzation

Asset and technology purchases

Business expansion

 

What you are starting a business or focused on improving cash flow solid financing solutions can help you stay ahead of the game, grow sales, and be able to meet business needs around unexpected expenses.

 

What then are the basic financial solutions available in SME COMMERCIAL FINANCE? They typically include the following, and all come with a different interest rate and repayment structure -

 

A/R Financing - (includes factoring, Confidential Receivable Financing)

 

Inventory Finance

 

Bank credit lines/term loans

 

Non-bank full business credit lines – ‘ ABL’ loans

 

Equipment Finance/sale-leasebacks - equipment loans

 

GOVERNMENT LOANS AND GRANTS

 

Government of Canada Guaranteed Small Business Loan Program (this just in! New limit is $1,000,000.00) - Probably the best government-sponsored financing program - Many business owners/ entrepreneurs quite rightly look to the government of Canada for financing programs in the Small business sector. No secret that economists tell us that the 'SME' sector in fact drives the Canadian economy.

 

The Canada Small Business Financing Program - ' CSBFP' is a great start for those looking for capital. Although not as robust an offering as its U.S.  SBA /  small business administration counterpart, the 'SBA' program ( what's with all these acronyms?!) is a viable way to start and grow a business. Monthly payments are made under a term loan structure and a limited personal guarantee is required.

 

Of interest is the fact that many franchises are financed through this program, it's close to a perfect fit for that!

 

Government business loans are available to Canadian business owners who are looking for financing. Although the Canadian government has many different programs in place to help all businesses, they tend to focus on providing small business loans the most. After all, keeping small to medium-sized businesses afloat helps add to local economies and makes the country a more diverse and interesting place to live.

 

Government small business loans may be a viable option for Canadian entrepreneurs looking to grow their businesses. Here is some information about Canada’s loan program to help finance small businesses, known as the Canada Small Business Financing Program or CSBFP. Eligibility is for that firm with under 10 M in sales, and even proprietorships and partnerships can apply. The primary assets financed under the program include leaseholds and equipment and even real estate. The program is often, as we noted in the case of franchises, used to purchase an existing business from a seller or franchisor.

 

Many clients we talk to here at 7 Park Avenue Financial are misinformed about what can or cannot be financed under the program - etc.

 

 

SR&ED Loans- Refundable tax credit financing

 

Royalty Finance

 

Franchise Loans

 

Working Capital Loans - Merchant Cash Advance

 

Unsecured cash flow loans

 

 

Our experience tells us that timelines often drive the financing need, with, unfortunately, many clients demonstrating reactive as opposed to proactive financing searches. Some transactions definitely require more time than others to successfully be completed, and unfortunately, some firms don't have the financial resources to control their destinies! Aka ' running out of cash!

 

Can we provide a guarantee around your business financing needs? Yes, we can! We guarantee that your financing search may well become time-consuming and frustrating and challenging! 

 

CONCLUSION - BUSINESS FINANCING, LOANS FUNDING - A ROADMAP TO FINANCIAL STABILITY AND GROWTH

 

Looking for the right financing options to help your business survive.. and grow?! Whether it's a commercial loan from traditional financiers or an alternative lending and funding option it's important to be well-informed about your options. Get the right business advice about your financing needs and get ready to watch your business grow

 

When it comes to debt and working capital financing call  7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with your business finance needs.

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

 

What are the main types of financing for businesses?

 

   The main types of financing for a business include:

 

Business credit cards and working capital loans / online lenders

Term loans/installment loans

Government Loans

Lines of Credit

Commercial mortgages

Equipment financing /leasing

Business owners own financial resources 

 

What is the difference between secured and unsecured business loans?  

 

Secured business loans such as business term loans are backed by collateral, such as business assets such as real estate, vehicles, or machinery. Personal assets are sometimes used as collateral for bank-type financing. In contrast, unsecured business loans do not require collateral and are based on the borrower's creditworthiness and when used as a  business line of credit the borrower will pay interest only on funds used. Because secured loans provide the lender with collateral in case the borrower defaults, they typically have lower interest rates and longer repayment terms than unsecured loans.

 

 

 What types of funding solutions are available for small businesses in Canada? 

In Canada, small businesses have access to a variety of funding solutions at competitive interest rates, including commercial loans, business loans, alternative lending solutions, and funding options for specific business needs such as business expansion, starting a business, improving cash flow, and property finance. Each funding solution has its own eligibility criteria, borrowing limits, and interest rates, so it's important to do research to find the right fit for your business. Government small business loans work well for a number of startup and early-stage financing needs and are available from banks and credit unions. The maximum loan amount under the government loan program is 1.1 Million dollars.

 

 

How can I apply for a business loan? 

To apply for a business loan for business finances the business owner will need to provide a detailed business plan, financial statements, and cash flow projections. The interest rate on a business loan is typically based on the Bank of Canada policy rate, plus an additional amount that reflects the level of risk being taken by the lender. It's important to do your research on different lenders and their application processes to find the right fit for your business needs.  Minimum personal credit score requirements in the 650  range is required on most business loans ( as well as personal loans )  - Timing on receipt of loan funds should always be considered as alternative financing typically delivers a faster financial solution.

Business Funding Expert Tactics For Your Company

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You Are Looking For a Canadian Business Financing Expert!

Unlock the Secrets of Business Financing with Help from Business Funding Experts @ 7 Park Avenue Financial

We've Solved the Debate Over Small Business Finance Solutions in Canada

You've arrived at the right address!  Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the  biggest issues facing businesses today 

               Unaware / Dissatisfied with your financing options?

Call Now!  - Direct Line  - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Email - sprokop@7parkavenuefinancial.com

 

 

INTRODUCTION 

 

Business funding expert tactics are critically valuable for any business owner or financial mgr.  We read daily that business financing is widely available these days - that's mostly true. Still, the type of funding you require and all the issues surrounding collateral, personal guarantees, etc., must be overcome properly.

 

The ability to achieve proper levels of business financing for your company is a crucial element in business growth and success. That challenge is always a large one for small and medium-sized companies in Canada.  But how do the business owner and financial manager access financing options that suit the needs of the business?


Let's dig in on expert business funding options to help your company navigate the sometimes complex landscape in Canada.

 

 

 

WHAT TYPE OF BUSINESS FUNDING DO YOU NEED? UNDERSTANDING YOUR CASH NEEDS

 

The ability to understand the importance of cash flow management and debt financing is essential to the long-term growth of your business. The business owner's ability to monitor and analyze current financial position helps in cash flow management and the outflows of cash - allowing businesses to meet short-term obligations, as well as managing inventory purchases and meeting unexpected financial business needs.

 

Click here for the business finance track record of 7 Park Avenue Financial

When it comes to the balance sheet it is all about leverage -  your ability to leverage key business assets such as accounts receivable and inventory allows for better asset turnover and cash management via business loans and asset financing that makes sense.

The type of business financing you need is key to collateral, guarantees, lender covenants, etc. Broadly speaking, the types of business financing can be broken down into ' traditional ' and  ' alternative ', and within those two categories are working capital, cash flow and debt solutions.

 

Depending on whether your firm is experiencing the proverbial ' cash crunch ' or if it's simply looking for growth capital, it's that type of question that dictates what type of funding works best for business owners in Canada.

Established companies typically are long past the ' friends and family approach to business finance; they, therefore, must be prepared to travel the loan application road to business financial success.

 

  

 DEBT VERSUS CASH FLOW FINANCING - WHICH ONE WORKS FOR YOUR COMPANY   

 

Accessing capital allows the business owner to start, operate, or buy a business.  The good news is that a combination of bank loans, government loans,  and financing from commercial finance companies and asset-based lenders provides a variety of traditional financing and alternative lending options.

Your ability to either monetize assets or repay the debt will drive your decision toward the right cash flow solution. Both traditional and alternate lenders will want to know what your current secured debt structure looks like. They are, of course, looking for repayment ability and what type of collateral matches the finance solution your firm needs.

 

 

WHAT IS THE RIGHT FINANCING STRATEGY FOR YOUR BUSINESS?

 

Creating the right finance strategy for your business is all about the right loan at the right time - That's why understanding your current cash flow position and identifying the type of financing you need becomes job #1  - Your search will revolve around the flexibility of the financing offered, repayment terms and the type of business lender suited to your particular business model and industry.


The initial finance discussions are always best handled when you're well-armed with what business lenders look for - that might include a well-thought-out cash flow and a business plan that profiles the strengths and prospects of your company. In the old days, we called this ' source and used' of funds, and it's at the heart of the business cash flow question.   7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders

 

 

WHAT ARE THE KEY PARTS OF A BUSINESS FINANCE APPLICATION

Other key parts of the overall business application might well include personal financial info on the business owner/owners, copies of recent bank statements, articles of incorporation, etc.. Let the 7 Park Avenue Financial team work with you to put a winning loan package in place for the type of financing you need to run and grow your business.

We spoke of how the type of financing you need will drive the optimal business finance solution. And by the way, in many cases, the optimal finance solution might include a cobbling together of various solutions.

 

THESE BUSINESS FINANCING SOLUTIONS ARE AVAILABLE TO YOUR BUSINESS

Short Term Working Capital Loans/merchant advances/business credit cards - good personal credit history of a business owner is important

Term loans - typically 3-5 years and cash flow based

Chartered bank lines of credit

Non-bank asset-based lines of credit - these facilities finance receivables, inventory and equipment and typically provide twice the amount of capital as a bank line of credit - less focus on

A/R Financing - aka ' factoring and invoice discounting

Inventory Financing

Tax Credit Finance

Equipment Finance and sale-leaseback strategies

Commercial mortgages

 

  

KEY TAKEAWAYS: BUSINESS FINANCING  

 

Business owners can consider debt financing, equity financing, and cash flow alternative financing solutions

Government Loans and Grants are available for small and new businesses

Specialized financing is available based on the business model and industry

Traditional lenders focus on  the capacity of the business to borrowers, general economic conditions, collateral and personal guarantees and  business experience

 

Companies in search of financing should focus on the best type of financing to suit specific business needs while ensuring they understand the loan and credit approval process - A solid business plan and cash flow projections always help achieve the best interest rate available

 

Traditional funding options are not always accessible for SMEs in Canada - Business owners should investigate commercial funding for additional funding  via alternative financing options available from alternative lenders  for a combination of short-term financing as well as long-term funding for growth and expansion or business acquisition

 

 

CONCLUSION - DISCOVER THE BENEFITS OF WORKING WITH A BUSINESS FUNDING EXPERT FOR BUSINESS FINANCE NEEDS

 

If you want to succeed in business financing is critical to your success - Managing cash flow and accessing business capital can help you start, run, and even ultimately sell your business. Talk to the 7 Park Avenue Financial team about finding the right option for your long-term growth needs.

If you want to ensure you're on the right track to business capital, seek out and speak to  7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor with a  track record of success. We'll show you how a business funding expert can deliver on cash flow and debt financing you need to start, run and grow a business - Let's get started on business funding expert business financing solutions.

 

 FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

 

What are some crucial factors to consider when seeking business financing?

In the search for business financing, business owners must consider key factors such as financing costs and interest rates as well as understanding the application process around the type of financing the business needs. Eligibility criteria vary when it comes to the type of financial institution offering the financing, whether that is a traditional bank loan or financing from alternative lending sources. The ability to exhibit proper cash flow management and planning will help the financial leverage of balance sheet assets and provide more financing for business operations growth and the ability to explore business opportunities

What is the Canada Small Business Financing Program and its registration fee?

 

The Canada Small business financing program is a small business loan program from the government for small businesses ( under 10 Million dollars in revenue ) which guarantees the loan to participating financial institutions which is typically a  bank or credit unions, The registration fee for loan approval is 2% of the loan amount - Financing is available for term loans for assets, leaseholds, and real estate, and changes to the program in 2022 increased the total loan amount available to 1.1 Million dollars - The programs is excellent in terms of a small or new business being able to access financing for capital investment in the business. Both term loans and lines of credit are available to the borrower.

A good personal credit score is required by the borrower and a limited personal guarantee is required.

What is the significance of having a sustainable financing strategy for a business?

 

A sustainable financing strategy allows a business to access capital when the business needs funding and is a factor allowing a company to avoid repayment default via good financial planning to avoid financial risk to the business.

What is SME business finance, and why is it essential for any business?

 

SME business finance is a term which includes financing resources and small business loans and assistance available to small and medium-sized businesses in Canada. Companies can access capital through a variety of sources for purposes that include purchasing new assets, or financing the current assets of the business, primarily accounts receivables and inventory. The ability to fund both day-to-day operations while planning for long-term growth and achieving good cash flow management is essential in running a successful business.

What are the various ways to find funding for a business?

 

Business funding to raise capital and secure funds can be achieved through debt financing via commercial loans, cash flow financing, or equity financing. Businesses considered equity financing consider financing from venture capitalists, angel investors and private equity firms - Bank lending for a business loan in Canada focuses on the ability of the company to demonstrate cash flow and general overall creditworthiness

Business benefit from carefully prepared business plans with accurate financial projections. Companies seeking non-dilutive financing will consider traditional bank financing as well as alternative finance solutions from commercial finance companies and asset-based lenders.

 

 

Mastering Business Financing and Lending Sources : A Comprehensive Guide for Entrepreneurs

 

YOUR COMPANY IS LOOKING FOR SOURCES OF BUSINESS FINANCE ! 

Unlocking Your Business Potential: Exploring Business Financing and Lending Solutions

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the  biggest issues facing business today

                              ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

Discover the Power of Business Financing and Lending: Fueling Growth and Expansion for Your Company

 

 

Business financing! You've heard the rumour, namely that business lending is more available than ever. Whether it's small business funding or medium to larger corporations we hear capital is almost unlimited.

 

INTRODUCTION

 

For any company in Canadian the ability to access business financing lending solutions is critical, more so for the SME sector which always has a capital challenge. Proper financing and access to capital help businesses overcome growth challenges, allowing companies to seize opportunities that arise.  Understanding what business loans are available and what the benefits of financing are is key to considering traditional and specialized alternative financing solutions for business needs.

 

 

UNSECURED  BUSINESS LOANS - CANADIAN  BANKS 

 

Unsecured business loans in Canada do not require the borrower to pledge specific assets as collateral - Banks focus on an overall view of business and owner credit history, with a focus on profits and business cash flow projections.

But for those firms that for a variety of reasons can't qualify for all or even some of the financing they need from traditional sources such as Canadian chartered banks, there is hope - in the name of asset-based financing options.

 

WHAT STAGE OF BUSINESS IS YOUR COMPANY IN?

Let's backtrack a bit and understand that a company, from a lender's perspective, will always be identified relative to what stage of the company  ' life cycle ' it is in.

 

That might come in several stages, going all the way back to pre-sales revenue r&d  to initial start-up. It's a long journey to that ' high growth' stage. And it's not hard for the entrepreneur to dream about that final stage of business maturity where traditional financing sources are unlimited.

Have we forgotten anyone? Yes, we have, and it's prudent to mention that many companies, for a variety of reasons, are financially challenged and have poor financial performance and some serious cash flow or debt problems. Suffice it to say the good news here is that even these firms can be financed or re-financed, as numerous alternative-based finance solutions are available.

Many firms often find themselves in the position of taking on larger orders or contracts that typical small business funding solutions can't deliver on.

 

 

Purchase Order Financing  - This is an increasingly popular method for a company to support purchase orders or contracts from new or larger clients. Without having to raise new equity or debt your order is financed by the lender based on who your client is and also ensuring you have a legitimate supplier. This financing can be achieved very quickly and makes sense when traditional finance doesn't work.

Accounts Receivable Factoring -  This type of finance allows you to cash flow invoices immediately after you make a sale or deliver your services. The general creditworthiness of your clients allows you to get advances on your sales typically in the 80-90% of the invoice value. Naturally, this eliminates waiting to get paid, which these days seems to take anywhere from 30 to ..dare we say it.. 90 days!

Businesses should investigate Confidential Receivable Factoring  Financing - allowing businesses to achieve all the cash flow benefits of factoring and a/r finance with the ability to bill and collect their own invoices.

Simply speaking A/R financing is a cash flow accelerator!

 

  

SECURED  BUSINESS LOANS / ASSET-BASED LENDING  

 

Asset-based financing solutions allow companies to pledge specific physical assets of the business such as accounts receivable, inventory,  fixed assets and equipment, and commercial real estate owned by the business. Thousands of small businesses in Canada are gravitating to alternative finance solutions.

Non-Bank Business Credit Lines -  Alternative financiers offer credit lines based on your inventory, receivables and equipment as a lump sump collateral. In our experience, these credit lines almost always exceed the amount you would receive under typical bank margining of these assets.

 

  

START-UP LOANS / SMALL  BUSINESS LOANS, AND GOVERNMENT LOANS AND GRANTS  

Starting and growing a business is always a challenge - most early-stage businesses lack business assets as well as the track record that a business lender is looking for. Business plans are essential and will include information on the company and business model,  information on owners, and projected sales and profits - 7 Park Avenue Financial prepares business plans that meet and exceed lender requirements.

Small business loans of various types, both traditional and alternative can provide the cash a business needs to grow or improve production via new assets or technology. Financing is also available in the form of inventory financing, leasehold improvements finance,  and acquisition of assets.

 

 Government Loans and Grants - Canada Small Business Financing Program (CSBFP) 

 

Government loans and grants are always available for funding a business - they are attractive to many business borrowers as loans are typically unsecured and have favourable repayment terms and competitive interest rates. Qualification criteria also easier to receive credit approval compared to traditional chartered bank financing.

 

The Canada Small business loan program is available for any business with under 10 Million dollars of actual or projected revenue. The government bears the majority of the risk with bank and credit union lenders that participate in the program.

 

The loan amount cap on the program is 1.1 Million dollars and recent changes in 2022 to the program greatly increased financing capability, with companies being able to borrow under a term loan structure, as well as lines of credit and working capital and funding of intangible assets. Traditional uses of the program have been the ability to fund leasehold improvements, new equipment purchase assets or technology, as well as acquiring real estate. A business loan calculator will allow simple calculations around monthly payments, amortization, etc. A minimal personal guarantee is also a favourite part of the program.

 

Talk to the 7 Park Avenue Financial team about the government SBL program and the application and process around this popular method of financing business from participating financial institutions,

 

CONCLUSION -  BUSINESS FINANCING BUSINESS LENDING FUNDING

 

As a business owner, you need to understand the different finance options available to grow and succeed in the ultra-competitive markets of today.  Selecting the right lending solution to support growth is key - whether you are looking to fund day-to-day operations, access government loans and grants, buy a competitor, etc. Knowledge of the business lending landscape is key!

 

If your business is growing, or even experiencing challenges investigate non-bank solutions that will allow your firm to be in a  constant position to access capital based on specific needs.

 

Seak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with business advice and success in achieving business lending solutions.

 

  

  

FAQ: FREQUENTLY ASKED QUESTIONS  / PEOPLE ALSO ASK  / MORE INFORMATION   

 

  

  

What are the best possible sources of business financing?  

 

The best possible sources of business finance include:

Bank loans

Government Loans / Grants

Venture capital/ angel investors

Supplier Financing/ trade credit

Invoice Financing / Factoring

Personal savings / Friends and family

Business credit cards

Short-term working capital loans - lump sum payments via monthly payment based on sales/owner personal credit score - higher interest rate but quickly accessible financing

 

How do you finance business growth?

 

To fund growth and expansion businesses  should investigate:

Reinvestment of earned profits  - they do not bring debt to the balance sheet and do not dilute owner equity

Bank financing for cash loans,  equipment purchases and working capital

Government-guaranteed loan programs 

Understanding Working Capital: Key to Successful Business Financing

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YOU ARE LOOKING FOR WORKING CAPITAL AND BUSINESS FINANCING!

Business Financing 101: How to Manage Your Working Capital

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

Let us help your firm just like our hundreds of other satisfied clients.

        Financing & Cash flow are the biggest issues facing businesses today

   ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Or Email us with any questions on Canadian Business Financing

EMAIL - sprokop@7parkavenuefinancial.com

 

 

Unlocking Your Working Capital Potential: Innovative Business Financing Solutions

 

If you're like most of us Mom never really gave us a lot of advice on working capital!

 

That's why for such an important business financing subject we recently read an older article in Canadian Business magazine that covered a total of 15 - yes that’s 15! - ways to finance your business. Perhaps these were the secrets of the Holy Grail that Mom never taught us, we thought. Turns out some were, but most were not! So let's dig in and get serious on the subject of cash flow financing your business needs.

 

CASH FLOW FINANCING SOLUTIONS

 

Cash flow financing is a business finance option for businesses that are growing and require either business loans or upfront investment to generate further revenue as well as to fund ongoing operations.

 

That ability to fulfill existing debt obligations and to have the financial capacity to grow the business requires solid cash flow forecasting and short-term financing strategies for funding cash flow to run and grow the business.

 

Cash flow loans can include working capital term loans, business lines of credit,  receivable financing strategies and other innovative traditional and alternative finance solutions. Financing your business properly enhances the chances of business growth with proper working capital efficiency!

 

"In business, the rearview mirror is always clearer than the windshield." - Warren Buffett

 

  

WHAT IS A WORKING CAPITAL LOAN?  

 

A working capital loan is a type of financing in a term loan structure that allows a business to fund ongoing day-to-day business expenses such as accounts payable,  rent, purchasing of inventory, and other miscellaneous overheads.

 

This method of financing covers short-term gaps in cash flow and provides businesses with essential capital to run a business smoothly.

 

The majority of working capital loans are unsecured and require no collateral - loans are ' backstopped' by the cash flows of this business - as well as the guarantees of business owners- Loan amounts and repayments are structured based on the type and amount of financing - so amortization is on an installment basis and may be short term or several years in duration.

 

Working capital loan financing is provided by banks, business credit unions,  online lenders, and other alternative financing providers. Typical information required to process such a loan includes the financial statements of the companies, tax returns and other basic business information on the business - in some cases, a business plan will benefit the chances of approval.  Cash flow projections will typically be provided by the borrower to show the overall stability of the business as well as repayment capability.

 

 

DO YOU UNDERSTAND YOUR CASH CONVERSION CYCLE?

 

The cash conversion cycle,  aka  (CCC)  is a financing measurement tool that allows a business to assess its working capital needs and uses - that allows the business to assess the cash needs of day-to-day operations. The cash conversion cycle calculation measures the amount of time it takes for a company to both meet obligations as well as factor in cash inflows from collections - A shorter timeframe is generally accepted as a better number.

The calculations used in the measurement include asset turnover ratios such as inventory, receivables, and payables - All information is based on information in the financial statements such as cost of goods, dso, sales, and ending payables.

 

WHAT ARE SOME COMMON USES OF WORKING CAPITAL FINANCING

 

Working capital financing has a wide range of uses such as the ability to invest in inventory and other required materials.

Many businesses are seasonal or cyclical in nature and will often require upfront capital to meet requirements during off-peak periods - Also in the business many short-term opportunities arise such as purchasing material or inventory at better prices /costs.

Staffing and labour costs can also be met by working capital finance solutions.

 

WHAT IS MEZZANINE DEBT?

 

Mezzanine debt is an unsecured cash flow loan provided by private finance firms. In almost all cases, it focuses solely on cash flow as the repayment vehicle. The bad news on mezzanine debt is that it typically is available for larger transactions in excess of several million dollars, which certainly doesn’t work for most small and medium business owners. For the record mezzanine financing rates are higher, and often in the low to mid-teens.

 

  

DOES YOUR BUSINESS QUALIFY FOR VENTURE CAPITAL FINANCING ( SPOILER ALERT- PROBABLY NOT!)  

VC money is often bandied about and sought by many corporations. Venture capital in Canada is struggling in the 2023  environment, any fundings seem to be going to firms that have been previously funded and are getting additional capital (to stay alive?). 

 

Any Venture capital firm expects a high rate of return relative to the risk they are taking in financing your firm on an equity basis - in fact traditionally, as the article stated, the venture capitalists are looking for a 5 times return.  Unfortunately for many Canadian business owners, these types of funding go to the sexier industry segments such as biotechnology, high tech, etc.

 

 

CONCLUSION -  WORKING CAPITAL IS THE FOUNDATION OF BUSINESS FINANCING

 

The common types of cash flow and working capital financing for SME businesses will include term loans, business credit lines, invoice financing such as factoring, and short-term working capital loans known as a ' merchant cash advance '. Small business loans under the Canada small business financing program now include working capital facilities based on changes to the program that Industry Canada made in 2022.

 

Many businesses use business credit cards to cover small operational costs,  while term loan structures for cash flow are for more established companies that can prove positive cash flow for repayment. Line of  Credit facilities are useful for any business requiring the need to address cash flow gaps around the investment a company makes in a/r and inventory and the company will pay interest only on funds drawn under the facility.

 

Short-term merchant advances are smaller installment loans geared to a formula around company sales and the business owner's personal credit scores and are readily accessible but come with higher interest rates.

 

Call 7 Park Avenue Financial, a trusted, credible and experienced business financing advisor who can provide you with an up-to-date realistic alternative to business funding and business loan needs.

 

 

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

 

 

How do you calculate working capital?

Working capital is calculated by subtracting current liabilities on the balance sheet from the company's current assets also listed on a balance sheet 

 

 Why is working capital important? 

Working capital is important because it represents the funding that the company has available to service day-to-day operations. Positive working capital that includes good asset turnover in balance sheet accounts will ensure the ability of the company to pay bills and invest in growth opportunities. When working capital turnover is poor businesses struggle and may be perceived as having credit risk to business lenders who focus on calculations around the working capital cycle and debt service coverage ratios.

 

What is a good working capital ratio?

 

A good working capital ratio is in the 2 range if asset turnover is reasonable - If the working capital ratio, also known as the current ratio, is negative then the company may be breaching loan covenants and may be considered insolvent.  - When the ratio is exceedingly higher than 2 it suggests asset turnover around days sales outstanding, inventory turns, and payables are poor.

 

Can working capital be negative?

Working capital can be negative in certain circumstances,  It is not always cause for concern as many businesses and business models such as retailers selling on a  cash basis can operate with negative working capital efficiency ratios.

 

 Is  SR&ED Financing A Source of Working Capital 

The sr&ed program provides billions of dollars of capital for any firm in Canada that qualifies for research spending and adheres to the program guidelines. SRED claims can also be financed, similar to a receivable, as soon as they are filed, which supercharges the program even more from a working capital business financing perspective.

Click here for the business finance track record of 7 Park Avenue Financial