Business Financing For Term Loans & Line Of Credit : Inside The World Of SME Finance Choices For Canadian Business Owners

Whatever Happened To Good Old Fashioned Business Financing Choices For Your Company? We Think We Know

OVERVIEW – Information on business financing in Canada. Whether it’s term loans or a revolving line of credit the choices for owners and financial managers are numerous

Business financing choices for term loans or a line of credit often seem like huge hurdles when it comes to funding accessibility for owners/financial mgrs. They will often lament the lack of choices in cash flow and capital solutions. Our thoughts? In fact you probably have more choices today than you ever did for your cash needs! Let's dig in.

Is there ever a time when a company doesn’t need funds. Whether it's acquiring new assets, considering expansion into new markets or products, or simply paying daily operating expenses there’s always a need for financing solutions.

Your timeframe of reference is critical to assessing and acquiring your financing solutions. Typical timeframes are of course ' short term' for daily needs such as a line of credit, or ' long term ' as it relates to capital assets or investments in R&D. In the long term you might be considering simply refinancing your current business is funded - that perpetual mix of owner equity and debt - and the right combination of those two.

In the middle there are often' bridge loan' needs for a variety of circumstances. These solutions can fill the gap that comes from the dynamic changes in your business.

From small business perspective, many firms are in start up or early stages, The Govt of Canada has one of the best programs that thousands of firms utilize every year. This loan is now up to $1,000,000.00 in loan cap, provides a govt guarantee to your bank for 90% of your loan , and comes with great rates and flexibility that even some more traditional forms of financing can't deliver on , i.e. no penalty pre-payment, longer terms, etc.

As we've stated, there is a ' new normal ' in Canadian business financing. That new normal includes the rise of numerous alternative finance solutions. Those combined with traditional bank financing offer a large slate of funding solutions.

Looking for a simple list of business financing solutions available to your firm? Here they are!

A/R Financing/ Invoice Factoring/ Confidential Receivable Financing

Inventory Loans

Bank credit lines

Non bank asset based revolving credit lines

Govt Guaranteed Business Loans

Tax Credit Financing (SR&ED / FILM)

P O / Contract Financing

Equipment Financing

Unsecured cash flow loans/ Mezzanine financing

Franchise Loans

Sale Leasebacks

Royalty Financing

This broad range of financing solutions allows your firm to grow, hire people, and become key players in their industry.


To implement any financial solution you need to understand where your ' financing gaps' are and which solutions will work when it comes to either taking on debt or simply monetizing your assets to the maximum , while still employing prudent leverage.

Are you aware of all your financing choices? If not seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan and line of credit needs.

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

Bank Financing Solutions In Canada : A Mindset Rework On Working Capital & Term Loan Solutions

Diving Into Bank Financing In Canada With Knowledge Vs. Myth

OVERVIEW – Information on achieving successful bank financing in Canada. Working capital, cash flow and term loans can power your business to new levels with flexible finance and low costs if you know how to qualify and position your business

Bank financing in Canada is often viewed as a ' hurdle ' for business owners/financial managers, particularly in the SME COMMERCIAL FINANCE needs area. These can be often overcome with some basic knowledge of success strategies to achieve what is arguably the lowest cost/most flexible financing available to the Canadian business owner. We're diving into some truths and myths around bank lending .Let's dig in.

We're not 100% sure of the per cent age amount of bank finance applications that are declined in the Canadian marketplace , but we do know that in talking to clients it's difficult for them to overcome getting inside the box . The box? That's the credit box of ratios, covenants and collateral that your firm must fit in. When you are not approved you're forced to get financing ' outside the box '! - more on that later.

Let's cover off some basic bank solutions to your capital needs, and then let's discuss several key areas you can in effect ' pre-qualify' yourself on, thereby improving chances of success.

The good news in Canadian chartered bank financing is that, when successful, you can achieve all your short, intermediate and long term financing needs for your business.

Those needs? They include:

Unsecured business loans: These loans are substantiated by your immediate cash flow. Terms are shorter in nature and are often for interim financing or seasonality finance needs of your business

Business line of credit: This of course is to cover off your ongoing working capital needs. It's quick daily access to your ongoing working capital and cash flow needs. In essence it funds your working capital accounts on your balance sheet - typically A/R and inventory.

Term loans/ Leasing - These solutions allow you to finance fixed assets and take on debt that makes sense for your firm. While not all Canadian banks offer ' leasing' solutions for assets in some cases they partner with major well known players. A term loan can also often achieve the same results and equipment lease finance.

Let's cover off some basics around the process. First of all it's critical to have a strong handle on what can be called your ' use of funds'. Knowing how much to ask for allows you to take a look at your finance statements and ensure you can meet 'debt service' ratios that are required for approval. Key point - banks love ratios!

Get used to it!











Typically a cash flow ratio of 1.25:1 is required. By knowing your cash flow ratio you can literally determine yourself the amount of busines credit you will qualify for - all other things being equal.

In the SME COMMERCIAL space in Canada owners must have reasonable personal credit. Know your credit score and be prepared to address issues that might arise out of that discussion.

Canadian chartered banks focus a lot of collateral, both inside the business as well as the owners outside net worth/assets. Different types of assets have different value - a good analogy would be real estate versus perishable inventory. Big difference in collateral!

Bank financing can also be achieved via the Govt Guaranteed Business Loan, which is administered by the banks but is actually a govt program, it’s a great way to achieve inside the box financing that you might otherwise not qualify for.

If it's necessary to go ' outside the box '

don’t forget that numerous non bank solutions exist for business capital needs. They include:

A/R Financing
Inventory Finance
Asset based non bank lines of credit
Tax Credit Financing for refundable tax credits
PO/Royalty financing
Leasing/Sale leasebacks

If you're looking to do a rework on your mindset of what Canadian chartered bank business financing is , or is not seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital needs - inside and outside the box!



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 BANK FINANCING EXPERTISE







Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Working Capital And Term Loans In Canada. Which Cash Flow Solutions Guarantee Happiness And Success ( In Your Company)

Long For The Golden Age Of Financing Choices?


OVERVIEW – Information on cash flow solutions for Canadian business. What are key differences between term loans and working capital options




Term Loans . Cash Flow Solutions for working capital . Business owners and financials managers focus on working capital whilst sometimes not determining whether the business financing solution is a longer term focus.

We first need to point out the differences between a business term loan and a receivable financing / working capital type financing solution.

Business loans of a term loan nature tend to be fixed payments. They will bring what we will call permanent working capital into your business. The nature of these loans is that they tend to be 'fixed' in term, payments, and rates. Your business can acquire a working capital business loan in a couple of different ways. The transaction can be facilitated purely on a 'cash flow 'basis. If the lender feels your firm has the cash flow to support the loan a loan will be created around that belief. Your historical and current financial statements (as well as your projections) should validate that your cash flow can meet the payment requirements of the loan.

The cash flow term loan can also be achieved in two other ways; it can be structured around what is known as a mezzanine or subordinated debt basis, or via a sale and leaseback of your assets or real estate. Some business owners feel it feasible to consider a 2nd commercial mortgage on their property, as an alternative to not having to sell the real estate to bring cash back into the firm.


We've covered the term loans portion of a cash injection into your firm. Another popular alternative is a 'factoring ( aka ' A/R FINANCE' ) solution'. This solution is becoming increasing popular in Canada. We point out that the factoring solution should generally be viewed as an interim solution - our experience is that a firm factors their receivables for a year or so prior to regaining a traditional financing status with the bank for a true margined operating line of credit.

To any Canadian business owner that currently factors their assets it is abundantly clear that the costs and processes are significantly more burdensome than a Canadian chartered bank facility - however, they do work, and they work for your firm now!, when you need it.


Canadian business considers Receivable Financing solutions when they have capital and debt ratio issues in their business. In many occasions the customer has a bank relationship and you need to simply augment that relationship with a factoring scenario for additional capital. The essence of this issue is that you are in fact 'maxed out 'at the bank, notwithstanding your good relationship with them.

Business owners quickly find out that banks have limits! Many people don't understand that a properly constructed factor/AR facility can compliment, and not necessarily replace a bank facility. You should seek the advice of a trusted, credible, and experienced financial advisor or intermediary in this regard. Our preferred solution for our clients is in fact a CONFIDENTIAL A/R FINANCING that allows you to bill and collect your own receivables, financing them only when you need to .

A/R Financing is a much better solution for new and start up businesses, and if your firm is not in a 'death spiral ',but simply experiencing temporary financial losses or one time set backs then factoring is a solid solution.
In summary, business loans for working capital are either fixed / term scenarios or working capital facilities based on current assets such as receivables and inventory. The


Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your options on the correct type of financing for your needs.


Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


7 PARK AVENUE FINANCIAL = CASH FLOW , TERM LOAN AND WORKING CAPITAL FINANCE EXPERTISE!





CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

























Stan Prokop