Business Credit Needs? Working Capital Via Alternative Financing Sources

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YOUR COMPANY IS LOOKING FOR BUSINESS CREDIT FOR WORKING CAPITAL FINANCING! 

Unlocking the Power of Business Credit and Working 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 - sprokop@7parkavenuefinancial.com 

 

Mastering Business Credit & Working Capital Solutions for Growth | 7 Park Avenue Financial

 

 

 

Bridging the Cash Flow Gap: Business Credit Strategies Revealed!

 

 

Read on to navigate the complexities of business credit because understanding these strategies is pivotal to bridging your cash flow gaps effectively

 

 
The Importance of Business Credit Requirements

 

Business credit requirements involve securing external additional business capital for your company. That involves a  working capital type loan,  as well as appropriate finance for a business that might come from traditional Canadian chartered bank financing line of credit, or alternative lending solutions.

 

  
The Importance of Cash Flow:

  

Cash flow represents the net amount of cash being transferred in and out of a business. Positive cash flow means a company is adding to its cash reserves, allowing it to reinvest in the business, pay off debt, return money to shareholders, or save for future challenges. Consistent cash flow is essential to meet payroll, pay rent, purchase inventory, and essentially keep the business operational.

 

Business credit needs are anything if not... consistent! In many cases the access to capital/ loans/ financing is one of the biggest obstacles to growth for a large section of companies constantly searching for SME COMMERCIAL FINANCE solutions. So how does the owner/manager ensure they have access to commercial financing needed to grow the company? Let's dig in.

 

No secret that every business, even larger corporations, eventually finds itself in a situation where it needs to secure additional capital. It doesn’t matter if it’s a startup trying to get itself off the ground or an established company looking to cover a cash-flow gap. The point is that having reliable access to working capital is crucial to your business and its success.

Traditional vs. Alternative Lending Solutions

Solutions might come from working capital loans or for larger businesses term loans can mezzanine type cash flow loans. Another key focus for many growing companies is to monetize current assets, typically A/R and inventory, that will allow you to cash flow your sales as you grow revenues.

Entrepreneurs, Business Owners and their financial managers looked to alternate lending sources when a traditional banking solution won't deliver on your 'cash flow gap'. That is whey alternate lenders have become increasingly popular in times of crisis or economic uncertainty.

 

Understanding the Different Financing Options

 

Thankfully business needs can be nicely broken down into several categories as follows: day to day operating capital, immediate growth needs for new opportunities, equipment and asset acquisition, hard asset refinancing via business credit.

Business Credit Lines

Business Credit Lines - These facilities aren't necessary emergency facilities, they should be sought after and used by every business. Whether it's business credit cards for smaller businesses or bank credit line revolving facilities or non-bank asset based lines of credit it's all about a day to day operating facility that works for your company. Approval lead times for these facilities are much shorter than when your firm contemplates longer-term loans from a senior lender.

Receivable Financing

Receivable Financing - The ability to finance your invoices as you generate sales is a very attractive option for most SME firms in Canada. There is literally a renaissance of A/R financing solutions that allow you to cash flow sales as you generate revenue. Typical advances against your sales are in the 90% range. At 7 Park Avenue Financial, we recommend Confidential Receivable Financing as the most effective solution.

Short Term Working Capital Loans

Short Term Working Capital Loans - These loans have exploded onto the Canadian marketplace and are a popular borrowing option. The loans are typically in the range of 10-20% of your firm's annual sales and are repaid according to your business cash inflows, so that might be weekly or monthly as an example. These are unsecured loans with no external collateral required, although the lender might choose to register a financing statement against your business under Canada's PPSA laws. Important to note also that this type of business finance should not be considered if your firm is in a downward sales spiral.

Unsecured Cash Flow Loans / Mezzanine Financing

Unsecured Cash Flow Loans / Mezzanine Financing - This funding option requires no external collateral or pledging of business assets. Naturally, your company must demonstrate it has a history of solid cash flow performance, with the loans typically tied to a 3-5-year maturity.

Other Financing Alternatives

The common 'go-to' solution in the eyes of owners/managers is to solicit chartered bank financing in Canada. If your firm has a strong balance sheet, profits, established history additional collateral etc. you'll find all the financing you need from our chartered banks who have virtually unlimited financing potential.

Navigating Through Financial Challenges

When the going gets tough, the tough get going goes the expression, so it is a case of getting somewhat 'creative' in your search for working capital. If your firm has assets and growth prospects we firmly believe you can get most, if not all the financing you need.

 

Key Takeaways

 

Working capital is the difference between a company's current assets (like cash, accounts receivable, and inventory) and its current liabilities (like accounts payable). It represents the short-term available resources a company has to run its day-to-day operations. A positive working capital indicates that a company can pay off its short-term liabilities with its short-term assets.

Business Credit Importance:

Business credit is the ability of a company to obtain borrowed money. It can be in the form of bank loans, credit lines, or other financial instruments. A strong business credit profile allows a company to secure financing under favourable terms, which can be crucial for growth, managing cash flow, or handling unexpected expenses.


Sources of Working Capital Financing:

Businesses can leverage multiple sources for working capital business loans, including:
Traditional bank loans/business loan or lines of credit.

Asset-based financing uses assets like accounts receivable or inventory as collateral.

Short-term loans/merchant cash advances often with higher interest rates but quicker approval processes. A good credit score for owners is often required as well as info on the business owner's personal credit - This financing is structured as a lump sum installment loan with monthly payments

Alternate lenders or non-banking financial institutions versus a traditional bank loan

Receivable Financing (Factoring):

This is a method where businesses sell their accounts receivable (invoices) to a third party (a factor) at a discount. It allows businesses to get immediate cash without waiting for customers to pay their invoices, and when comparing working capital loans a/r financing brings no debt to the balance sheet

 

 

Conclusion:

Call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding needs.

 

 

FAQ

What is the role of trade credit in working capital management?

Trade credit is an agreement where a supplier allows a business to purchase goods or services and pay for them later, typically within 30, 60, or 90 days. It's a form of short-term financing that can help businesses manage their cash flow by extending the time they have to pay for inventory, thus preserving working capital and minimizing debt payments

How can a business improve its working capital ratio?

The working capital ratio, calculated as current assets divided by current liabilities, indicates a company's short-term financial health. To improve this ratio, a business can increase its current assets (e.g., by collecting accounts receivable faster or managing inventory efficiently) or decrease its current liabilities (e.g., by negotiating longer payment terms with suppliers).

What are the risks associated with working capital loans?

While working capital loans can provide quick cash for short-term needs, they may come with higher interest rates compared to long-term financing. There's also the risk of over-reliance when you get a working capital loan or merchant cash advance, where a business continually borrows for daily operations rather than improving cash flow from operations. If not managed carefully, this could lead to unsustainable debt levels. The ability of small business owners  to provide business bank statements is vital

Can startups with no business credit history secure working capital financing?

Yes, startups can obtain certain types of working capital financing, but it might be more challenging to take advantage of financing without an established credit history for a business line of credit. Lenders may look at other factors, such as the personal credit of the business owner, the business plan, projected revenues, or even to make sure to understand the industry the startup is in. Some alternative lenders or crowdfunding platforms might also be more open to working with startups with the business owner

 

What is a working capital line of credit for business?

 

A working capital line of credit is a financing solution available to businesses, allowing them to access funds to meet short-term operational needs. Unlike a traditional term loan, which provides a lump sum of money upfront that is repaid over time, a line of credit offers flexibility in borrowing and repayment. Here's a breakdown:

1. Purpose: The primary use for a working capital line of credit is to finance the day-to-day operational costs of a business. This can include purchasing inventory, covering payroll, addressing seasonality cash flow challenges, handling unexpected expenses, or taking advantage of sudden opportunities.

2. Flexible Access: With a working capital line of credit, businesses can draw funds as needed, up to the credit limit. This is particularly useful for businesses with fluctuating cash flow needs.

3. Interest: Interest is typically charged only on the amount drawn, not on the entire credit line. For instance, if a business has a $100,000 line of credit but only draws $20,000, they will pay interest only on that $20,000.

4. Revolving Credit: It's "revolving," meaning that as the business repays the borrowed amount, that portion becomes available again for future use. Think of it like a credit card: if you pay off a part of what you owe, your available credit increases by that amount.

5. Secured vs. Unsecured: Some lines of credit may be secured, meaning they require collateral (like real estate, equipment, or inventory) to back the borrowed amount. Others might be unsecured, which typically means higher interest rates because the lender is taking on more risk.

6. Qualification: To qualify for a working capital line of credit, lenders typically look at a business's credit history, cash flow patterns, the overall financial health of the company, and sometimes the personal credit history of the business owners.

7. Benefits: A working capital line of credit provides businesses with flexibility, allowing them to manage cash flow gaps without taking on long-term debt. It also provides a safety net for unforeseen expenses or opportunities.

In essence, a working capital line of credit provides businesses with a cushion, allowing them to continue operations smoothly even during periods when cash inflows might be unpredictable or inconsistent.

 

What is working capital credit?


"Working capital credit" typically refers to a credit facility or financing arrangement that provides funds to cover a business's short-term operational needs, which is synonymous with the concept of the working capital line of credit I mentioned earlier.

However, to understand this concept more broadly, it's essential to first understand "working capital."

Working Capital: It's the difference between a company's current assets (like cash, accounts receivable, and inventory) and its current liabilities (like accounts payable). In simple terms, working capital measures the short-term liquidity of a business, representing the funds available to cover day-to-day operations.

Working Capital Credit: It can be any form of short-term financing designed to boost or support a business's working capital. Types include:

    Working Capital Line of Credit: As previously described, this is a revolving credit facility that businesses can draw from and repay as needed, based on their operational requirements.

    Short-term Loans: These are lump-sum loans with short maturity periods (typically 12 months or less) that businesses must repay, often with interest, by a specific date.

    Trade Credit: This is a form of short-term financing where suppliers allow businesses to purchase goods or services and pay for them at a later date, effectively extending credit terms.

    Invoice Factoring or Discounting: This involves selling accounts receivable at a discount to a third party (the "factor"). The business receives immediate cash, and the factor assumes the responsibility for collecting the invoice payment.

    Overdraft Arrangements: Businesses can overdraw their bank accounts up to a certain limit, providing a buffer for short-term liquidity needs.

The key takeaway is that working capital credit refers to various financial tools and arrangements that support a business's short-term operational needs. The choice of which type of working capital credit to utilize depends on the specific requirements, financial health, and strategic objectives of the business.


 

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

Working Capital Business Financing Sources

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YOUR COMPANY IS LOOKING FOR CANADIAN WORKING CAPITAL AND BUSINESS FINANCING SOURCES AND ALTERNATIVES!

A Guide to Business Financing Sources for Working Capital 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

                              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

 

  

Leveraging Business Financing Sources to Optimize Working Capital in Canada  

 

Working capital and small business financing sources are available to Canadian business owners and financial managers in several ways. 

 

INTRODUCTION

 

When we speak to clients about their needs and answer their questions in this area, it is simply a case of pointing out all the alternatives available and discussing what features and benefits of each type of facility make the most sense for their particular firm and industry.

 

Working capital represents a business's lifeblood and measures a firm's operational liquidity and short-term financial status. For firms operating in Canada, identifying the appropriate business financing to preserve and enhance more working capital is critical to growth, expansion plans, and continued profits.

 

Procuring the ideal financing is essential to a business's growth success. Business funding provides the needed resources to finance day-to-day operations, enter new markets, and invest in new technology and assets.

 

Business owners must examine various financing options to ascertain the best-suited solution to their unique requirements and situation. Each alternative comes with its benefits and drawbacks.

 

CHOOSING THE RIGHT SOURCES OF FINANCING FOR YOUR BUSINESS

 

Choosing the right source of business financing is a vital business consideration. This decision calls for an assessment of numerous elements including the expense of capital, the level of control maintained, accompanying risks, repayment conditions, and harmony with the business model. The secret to success lies in striking a perfect equilibrium between cost and risk while simultaneously ensuring the funding source resonates with the company's immediate and future objectives.

 

WHAT IS WORKING CAPITAL FINANCING?

 

Working capital financing is employed to fund your company's investment in short-term resources such as the company's investment in inventory and accounts receivable on the balance sheet - Working capital refers to key liquid current assets - short term financing solutions are also providing liquidity to support everyday operations like salaries/wages, overhead expenses, and other miscellaneous costs. 

 

Gross working capital  is the total amount of funds a company has in current assets versus Net working capital, which is the surplus calculated after deducting all current liabilities from current assets in measuring short term financial health and temporary working capital needs.

 

Often, small and medium enterprises rely on this form of financing when existing assets fail to cover their immediate liabilities.

 

 

 

SECURED VERSUS UNSECURED LOANS 

 

Most working capital loans and financing alternatives are secured, but that is not the case 100% of the time. With reasonably good financial health and equity in your firm, a cash working capital loan can be achieved at solid rates, terms and structures. This is generally not the norm, though, as most lending to small and medium businesses in Canada is secured somehow.

 

TRADITIONAL FINANCING OPTIONS - CANADIAN BANK LOANS AND LINES OF CREDIT

 

Financing typically brings to mind traditional options like bank loans and credit lines, often the primary go-to for numerous businesses. Banks and similar financial institutions provide these solutions with longstanding reliability. Let's delve deeper into each choice:

 

Bank loans:  Term loans from banks are set financing amounts to be repaid over a set term, with interest. Suitable for businesses showcasing good business credit history and solid financial performance around cash flow, profits, and healthy balance sheets.

 

A bank loan provides stability due to the lowest fixed interest rates and repayment terms. However, startups or businesses with low credit scores might find bank financing not accessible - these firms should consider various alternative lending solutions.

 

Lines of credit: This versatile financing option permits businesses to borrow up to a defined limit, functioning similarly to business credit cards—Companies borrow and pay back as necessary, paying interest only on the borrowed sum, a revolving line of credit that fluctuates.

Lines of credit suit businesses needing short-term financing or those desiring a financial buffer for unforeseen expenses.

 

 

SMALL BUSINESS FINANCING VERSUS LARGER CORPORATE FINANCE SOLUTIONS

 

For larger corporations, unsecured cash flow loans are more often than not called ‘subordinated debt,' and they are term loans structured around the analysis of the company’s ability to repay based on future cash flow forecasting.

 

Small business financing for smaller firms is simply a working capital solution that might have some covenants attached relative to ongoing profits and cash flow metrics.  Again, we can summarize these offerings by saying that cash flow unsecured loans are generally only available to firms with very good financial health and prospects and qualify for bank loan criteria for approval.

 

ASSESSING TYPES OF WORKING CAPITAL LOAN SOLUTIONS

 

In certain cases, the working capital and cash flow loans we have described above often relate to acquiring a business, with the funding provided to acquire the business.

 

LOANS VERSUS CREDIT LINES

 

A more common ‘working capital loan' is, in effect, not a  business loan per se but the financing of receivables and inventory / raw materials. In effect, your firm leverages these assets and turns them into ongoing working capital as you create inventory and receivables on an ongoing basis. In a line of credit facility, the business will pay interest only on funds drawn under the facility in this working capital finance solution from a lending institution.

 

THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM

 

Many business owners come to us and ask if there are ‘government loans' for working capital. The reality is that there is nothing available in Canada in that regard. The most common, successful and popular government loan program is the CSBFL program; thousands of businesses utilize this loan. The program is one of Canada's best loans to small businesses - bar none.

 

A solid business plan is a key program requirement - 7 Park Avenue Financial prepares business plans for clients that meet and exceed bank and other commercial lender requirements.

 

  

WHAT DO GOVERNMENT LOANS FINANCE?

 

Government financing alternatives may present a viable business financing alternative for businesses satisfying certain requirements.

The Government Of Canada Small Business Financing Program:  SBL loans are loans for small businesses in Canada with less than 10 Million dollars in sales revenue. The government guarantees loans to approved lenders such as commercial banks and some credit unions.

 

Changes to the Canada Small Business Financing Program in 2022  provide for long-term loans, sources of working capital and line of credit solutions, and a new 1.1 Million dollar loan cap, including affordable working capital loans for seasonal variable working capital needs.

 

Small business loans via the federal government program are solid financial alternatives as they have competitive interest rates and extended repayment periods. They are appropriate for businesses that align with the Canadian government eligibility standards and provide funds for business needs, such as working capital, equipment procurement, or commercial real estate purchases.

 

Talk to the 7 Park Avenue Financial team about how we can help expedite government loan financing.

 

Grants: These are non-repayable resources granted by the federal and provincial governments or other bodies to bolster specific business functions, research, or projects. Grants, not requiring repayment, thus become an appealing option for businesses. However, they are highly competitive, and the application process can be intricate and lengthy.  Talk to the 7 Park Avenue Financial team about grant financing / matching solutions.

 

  

DON'T FORGET TO FOCUS ON ASSET TURNOVER AND REDUCE YOUR FINANCING COSTS  

 

Some critical factors must be assessed and addressed when looking for a working capital solution. Many firms we meet can cure their working capital solutions by affecting a better turnaround in their receivables and inventory. Those are any firm's key working capital components of any firm to help address the company's short term operational financing needs via retained profits, etc.

 

A business has access to internal and external sources of capital, such as trade credit and delaying payables to vendor and trade sources - internal sources of financing and cash flow management. Businesses can also offer customers a prepayment discount if they pay before the terms credit period.

 

 ACCOUNTS RECEIVABLE FINANCING / CONFIDENTIAL A/R FINANCE 

 

If your firm has been self-financing, you should consider a working capital or an invoice discounting facility. This injects immediate working capital into your company and is not treated as a loan on your books. You are simply converting accounts receivable money owed to the business into quick cash.

 

Financing a business through accounts receivable factoring involves converting outstanding invoices into immediate cash. In this process, the factoring company pays a large portion of the unpaid invoice total - typically in the 80-90 % range - Companies receive the remaining balance, less financing costs, when the client pays the invoice.

 

Factoring as a financing method and working capital example is available solely for businesses that operate on credit terms. In this arrangement, the borrower (the seller) delivers a product (or service) and bills the customer, expecting payment at a future date. This anticipated future payment is recorded as an account receivable (a current asset) on the seller's balance sheet.

 

 

  

THE SHORT-TERM WORKING CAPITAL LOAN REVOLUTION   

 

Sometimes, a merchant cash advance, known as short term loans / working capital loans, might make sense for your business. These loans also finance future revenue receipts from credit cards / future credit card sales, which might apply to a retailer.

 

Many business owners we meet don’t even do basic cash flow planning. A straightforward template you can set up can easily show you what cash is coming in over the next three months, for example, and you already know your fixed and variable expenses. It’s as simple as that.

 

Working capital needs can be either short-term or long-term in nature. The cash working capital term loan we discussed earlier is a long-term solution for permanent working capital. On the other hand, converting your receivables and inventory via a working capital facility via a non-bank is immediate short-term cash flow.

 

CONCLUSION - SOURCES OF FINANCING IN CANADA

 

Are those venture capitalists/ angel investors not in sight !? ( Venture capital in Canada is for the smallest percentage of borrowers in Canada - and requires you to give up owner equity. Friends and family are a solution, but rarely the right one unless you're bootstrapping a startup or are ok with an angel investor-type partner.

 

Selecting the appropriate financing option for your business is a major decision that could significantly influence the business's financial success. Understanding the advantages and disadvantages of various financing alternatives and assessing your specific requirements is critical.

 

 It's crucial to seek professional advice and do the right amount of research on any business financing alternative.

Navigating the business financing landscape to secure working capital is critical to the success of any business operating in Canada. Understanding the intricacies of these sources, analyzing business needs, and making educated decisions are crucial for companies aiming to increase their working capital and boost their growth.

 

Work with a trusted, credible, and experienced advisor in real-world Canadian Business Financing solutions for small businesses in Canada.

 

Let the  7 Park Avenue Financial team assess your needs, evaluate the solution, and focus on implementing a facility based on the benefits of that type of financing. That is cash flow and working capital planning 101 when you want to finance your business for the growth potential you want to achieve.

 

 

Let the  7 Park Avenue Financial team assess your needs, evaluate the solution, and focus on implementing a facility based on the benefits of that type of financing. That is cash flow and working capital planning 101 when you want to finance your business for the growth potential you want to achieve.

 

  

FAQ: FREQUENTLY ASKED QUESTIONS  

 

What are the benefits of alternative lending?

 

Some may think that when people need financing, they are forced into traditional methods like loans from banks and other traditional lenders. However, there is an alternative option for entrepreneurs looking for working capital and startup funding; it's called "alternative lending." 

 

Successful startups and growing companies need working capital to grow. With no funding, they may never get off the ground- a scary reality for any entrepreneur seeking success in today's competitive market. If you're looking to avoid a traditional lender route, many options are available that could help a  business thrive! Finding out more about alternative financing methods is the first step towards getting what you deserve when it comes time to grow revenues and profits.

 

What is purchase order financing?

 

Purchase order financing is a short-term commercial finance option that provides capital to pay suppliers upfront for verified purchase orders. In such an arrangement, a third party agrees to provide a supplier with enough money to cover a customer's purchase order. Purchase order loans can finance an order in its entirety in some circumstances or just a portion of it in others.

 

What is the merchant advance short-term working capital loan?

 

 In return for a portion of daily credit/debit card revenues in the future, one can obtain merchant cash advances (MCAs), which are up-front payments into the company bank account based on future sales. The MCA is a sale of future income rather than a loan. Although this type of financing is pricey, it can be the best option for a company that performs a lot of credit card transactions but has little or no credit history. Companies in a seasonal business might use this short term finance solution for funding operating expenses.

 

What are crowdfunding and peer to peer lending?

 

In recent years, alternative financing options for raising funds have gained popularity among businesses, offering new avenues to secure funding. These options leverage technology and the power of the crowd to provide financing for share capital. Here are two alternative financing options worth considering:

 

**Crowdfunding:** Crowdfunding platforms, such as Kickstarter and Indiegogo, have revolutionized the way businesses raise funds/capital. With crowdfunding, businesses can pitch their ideas or projects to a large audience and collect small contributions from individuals. Crowdfunding is suitable for startups and businesses with a compelling story or innovative product that can resonate with the crowd. However, it requires careful planning, marketing efforts, and the ability to create a compelling campaign to attract backers.

**Peer-to-peer lending:** Peer-to-peer lending platforms, like LendingClub and Prosper, connect borrowers directly with individual lenders. Businesses can apply for loans and receive funding from individual investors. Peer-to-peer lending offers flexibility, competitive interest rates, and faster approval compared to traditional bank loans. However, it may not be suitable for businesses with poor credit or those in need of large loan amounts.

 

What are the pros and cons of angel investors and venture capital for equity financing?

 

For businesses with high-growth potential, venture capital (VC) and angel investors can provide significant funding and expertise. However, these options come with their own set of advantages and disadvantages.

**Venture capital:** Venture capital firms invest in early-stage or high-growth companies in exchange for equity. They provide not only capital but also guidance and mentorship to help businesses scale rapidly. Venture capital is suitable for businesses with an innovative product or service, a large market opportunity, and the potential for significant returns. However, securing venture capital can be highly competitive, and investors often require a substantial ownership stake and influence in the business.

**Angel investors:** Angel investors are high-net-worth individuals who invest their own money in startups or early-stage businesses and can assist a company in raising short-term capital. They provide capital, expertise, and industry connections to help businesses succeed. Angel investors are more flexible than venture capital firms and often invest in businesses that are too small or risky for traditional venture capital. However, finding the right angel investor can be challenging, and the process often involves networking, pitching, and building relationships.

 

What are factors to consider when choosing a financing option?

 

When evaluating and comparing different financing options, several factors should be taken into consideration:

 

1. **Business stage and growth plans:** The financing option that suits a startup may not be suitable for an established business. Consider the stage your business is in and its growth plans to determine the right financing fit.

 

2. **Creditworthiness and financials:** Lenders and investors assess the creditworthiness and financial health of your business before providing funding. Understand your credit score, financial statements, and other relevant factors to determine which options you qualify for.

 

3. **Interest rates and fees:** Different financing options come with varying interest rates and fees. Consider the cost of borrowing and ensure it aligns with your financial projections and ability to repay.

 

4. **Collateral requirements:** Some financing options and working capital loans may require collateral to enable the business to raise funds,  such as real estate or inventory, to secure the loan. Evaluate whether you have the necessary assets to meet these requirements.

 

5. **Repayment terms and flexibility:** Consider the repayment terms, such as loan duration, payment frequency, and flexibility. Ensure they align with your needs around more working capital and cash flow for business operations.

 

6. **Industry-specific considerations:** Certain financing options may be more prevalent or suitable for specific industries. Research industry-specific financing trends and consider whether there are options tailored to your sector.

 

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

Alternative Financing Business Loans In Canada: A Smarter Working Capital Solution For Growth Financing ?

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YOUR COMPANY IS LOOKING FOR  BUSINESS ALTERNATIVE  FINANCE SOLUTIONS!

Breaking Boundaries with Alternative Finance: The New Face of Business Loans

 

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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

EMAIL - sprokop@7parkavenuefinancial.com

 

BUSINESS FUNDING OPTIONS IN CANADA OUTSIDE THE TRADITIONAL FINANCE SYSTEM 

 

Business Loans in Canada come from ' traditional ' or alternative loans and working capital sources.

 

  

INTRODUCTION TO WORKING CAPITAL / CASH FLOW SOLUTIONS VERSUS TRADITIONAL FINANCING  

 

Around the time of the 2008 financial crisis, the nature of business financing and access to capital changed in Canada - a lot .. and can we not even talk about the Pandemic, please! Traditional lenders in Canada consolidated and somewhat retreated from SME financing in Canada. Alternative lenders have stepped in over the last number of years to fill the void, offering  Canadian business financing solutions that are accessible when compared to a traditional business loan.

 

For any business, large or small, access to business capital is critical - As a company's needs evolve, it is more evident than ever that non-bank business financing can provide every type of finance a business needs to grow. Let's dig in on the types of working capital and cash flow solutions you need.

 

Working capital and cash flow loans exist in more abundance than ever. So if you're a business owner or financial manager looking for help with small business financing outside of other companies' traditional thinking, let's dig in on types of business financing that make sense for your company!

 

  

  

UNDERSTANDING ALTERNATIVE FINANCE AND THE ROLE OF  TRADITIONAL LENDING VERSUS ALTERNATIVE FINANCING    

 

Alternative financing offers a large variety of Canadian business finance solutions; these include short-term working capital loans,  receivable financing solutions, non-bank business lines of credit, asset-based financing, and tax credit financing for r&d of film projects.

 

Traditional lending often entails complex application processes and strict requirements, with approvals primarily based on credit rating. Conversely, alternative financing offers a more accessible route with a streamlined online application process, faster turnaround, and a focus on a business's potential, making it an attractive option for businesses seeking swift, reliable funding.

 

 

Historically business owners and financial managers with SME COMMERCIAL FINANCE   asset finance and working capital needs worked through traditional channels, almost always' the bank. '  These firms traditionally don't have access to bank loans or the capital markets/venture capital. Given up on equity crowdfunding? So have many others! And don't forget equity funding will always demand a small percentage of your business - if not more!

 

Competition and efficiency in the Canadian lending markets have brought several new and different types of alternative capital solutions to your business - the challenge is knowing which is the right good option for your company and how one accesses capital in this manner.

 

UNSECURED LINES OF CREDIT

 

The golden solution in the past has been 'unsecured bank lines of credit ', focusing on companies with proven cash flow, great balance sheets, and good history for companies and owners. The problem is that thousands of firms, maybe yours? ... can't meet all those requirements, as logical as they might seem (if you're a banker).

 

Numerous alternative cash flow sources have grown steadily in Canada - one of the fastest-growing is in the area of receivables finance/invoice finance/invoice discounting,  where the ability to use your sales as collateral via business A/R overall credit rating is the appeal.

 

  

FINANCING OF WORKING CAPITAL  

 

Some great solutions are derived from this method of invoice factoring for business owners via the financial channels of a third-party factoring company for accounts receivable. For example, historically, your clients had to be notified of this process and financing. Not so fast, though! Utilizing Confidential Receivable Finance for unpaid invoices - acting as almost a bridging loan that allows you to generate immediate cash flow as your business sells and generates revenues while giving you the option as your firm takes responsibility to bill and collect with no notification to other parties as customer pay.

 

 

A factoring company, via accounts receivable factoring/ invoice financing, is, in fact, one of the most popular funding as an example of non-bank lenders who provide alternative funding.  Unlike banks, each  A/R  financing solution has its own benefits, so talk to the  7 Park Avenue Financial team about what suits your business model when you're looking for easier access and a streamlined approval and application process.

 

EQUIPMENT LEASING SOLUTIONS

 

When acquiring assets for your company (equipment, technology, vehicles, software, etc.) Equipment leasing is a bit unique in that it embraces both traditional forms and alternative finance needs. Almost any asset can be financed with considerable flexibility regarding monthly repayments, amortizations, prepayments, down payments, etc. Interest rates are very competitive regarding equipment lease financing - as well as it is a solid alternative to a bank loan with more stringent credit requirements in the traditional financial system.

 

That is what small business owners want to hear!

 

Clients often ask us why we are so bullish on alternative financing solutions. For a starter, don't get us wrong - Bank financing in Canada has a low cost, has a lot of flexibility, and provides virtually unlimited access to capital. Still, when it comes to unsecured business loan requirements, many firms can't meet bank criteria for borrowing.

But when ' the bank says no, '   working capital loans and asset monetization strategies from alternative lenders might work.

 

But reality sets in when many business folks realize that banks prefer ' upstream ' - namely, more significant deals with high-quality credit companies. Top experts tell us that one recent survey indicated over 40% of firms in the small to medium enterprise sector in Canada don't fully qualify for bank financing.

 

 

 ALTERNATIVE  FINANCE PRODUCTS / SOLUTIONS  

 

Alternative lending solutions are available for a broad range of business finance needs. Each type of financing suits a specific need around cash flow and working capital that help to fund business growth and profits.

 

P O financing

 

Tax Credit Financing (sr&Ed / film and TV)

 

Leasehold Improvements Financing

 

Condominium Corp Finance Loans

 

Management buyouts/acquisitions

 

Commercial Property Finance

 

Non-bank Asset-based business lines of credit

 

Bridge loans against real estate and equipment

 

Working capital short-term loans - Initial loans are typically based on a percentage of your sales financial history - Online lenders/peer-to-peer lending sites often offer this solution, also known as a merchant cash advance. Your business agrees to repay the loan on repayment terms that are on a typically fixed installment basis. Good owner credit history/credit score required.

 

It's no secret that organizations such as the CANADIAN FEDERATION OF INDEPENDENT BUSINESS.  Companies consistently cite that the SME COMMERCIAL FINANCE  needs of the Canadian economy always focus on the lack of and access; to.. more capital!

   

The Power of Alternative Lending: Empowering Businesses   

 

 

Many business owners and financial managers find their firms turned down by traditional bank financiers and are sometimes unaware of the criteria for SME borrowing in Canada when they want quick access to funding.

 

Small and medium-sized businesses must understand that traditional banks type financing will always revolve around the ' infamous ' 5 C's of business credit -

 

 

  

THE 5 C'S OF SMALL BUSINESS FINANCING APPROVAL   

 

Character

Capacity

Capital

Collateral

Conditions

 

Sometimes, you may want to ensure you have a solid business plan. The 7 Park Avenue Financial team prepares business plans that meet and exceed bank and commercial lender /alternative lenders' requirements. Startup funds and startup funding, in general, are difficult to access if you are not adequately prepared.

 

 

  

CONCLUSION - ALTERNATIVE BUSINESS FUNDING OPTIONS 

 

Canadian small and medium-sized business in Canada needs access to reliable sources of working capital - When conventional financing is not available and timelines to access traditional funding are long Canadian businesses can access alternative lending solutions that provide flexibility and ease of access to financing.  Alternative finance solutions are a compelling and needed alternative to traditional funding to support the growth of a business.

 

The bottom line?  Your business has finance alternatives for alternative lending solutions versus traditional financing for a financial product suited to your needs.  Business finance for small businesses in Canada will always be a challenge - but solutions do exist.

 

Speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with business loans and working capital solutions that make sense for your company and industry.

 

FAQ: FREQUENTLY ASKED QUESTIONS

 

What is alternative finance?

.

Regulated banks and similar financial institutions are great for many businesses. Still, the criteria they impose on smaller firms often can be too much to handle regarding bank loan requirements for business. Alternative lending refers to the need for other financing options versus traditional financing options so small companies may thrive and prosper in their respective markets without being suppressed by an unfair playing field favouring larger enterprises with more resources than these small and medium-sized businesses and startups have access to presently.

 

Alternative finance is a well-utilized commercial financing vehicle for available funding when companies can't raise funds based on their trading history. Alternative finance/ structured finance refers to non-bank financing via p2p lending, 3rd party commercial lenders / accredited investors, hedge fund managers, etc., who lend money..typically at higher interest rates and who view this as an alternative investment in alternative asset classes.

 

 What is alternative financing for small businesses?

Alternative financing refers to non-traditional methods businesses can use to obtain funding versus a traditional bank loan. These methods deviate from traditional financial institution such as standard bank loans and traditional business financing, including merchant cash advances, invoice factoring, or an online line of credit. They are primarily utilized by small- and mid-sized businesses looking for flexible, fast, and more accessible funding solutions via alternative business lending.

 

How does alternative financing compare to traditional bank loans?

Unlike traditional bank loans, alternative business financing offers quicker approval times, less stringent credit requirements, and a more streamlined application process than conventional bank loans. While traditional loans can take weeks or months to process for a business looking for a small business loan, alternative funding sources often approve and deliver funds within a few business days. However, alternative financing can have higher interest rates and shorter repayment terms than traditional loans.

 

Why is alternative financing becoming more popular among small businesses?

Alternative funding for small business loans is growing in popularity due to its flexibility and accessibility compared to traditional bank financing. Small businesses often face challenges obtaining traditional bank loans, like rigorous credit checks, long approval times, and high collateral requirements. Alternative financing provides a solution by offering various lending products, including asset-based loans and invoice factoring, focusing on the overall business performance rather than just credit history.

 

What types of alternative financing options are available for small businesses?

A wide range of alternative business loans and financing options are available for small businesses. Some of the popular ones include merchant cash advances, where companies receive a lump sum in exchange for a portion of future sales via the working capital loan based on an annual revenue calculation; invoice factoring, where businesses sell their unpaid invoices to a lender for immediate cash; business lines of credit, allowing firms to borrow as needed; and asset-based loans, using a company's assets as collateral to secure the loan.

 

What factors do alternative lenders consider when approving a business for a loan?

The alternative lender will look at various factors beyond business and personal credit scores. Alternative business lending criteria can include time in the business/industry, monthly sales, cash flow, and overall health. In many cases, alternative business lenders use technology to evaluate these factors quickly and efficiently, making the application process faster and simpler than traditional methods.

 

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

Working Capital Strategy And Structure / The Fix Is In For Business Cash Solutions

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YOUR COMPANY IS LOOKING FOR   WORKING CAPITAL FIXES!

Guide to Boosting Your Business's Working Capital

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?

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

EMAIL - sprokop@7parkavenuefinancial.com

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

From Cash Crunch to Cash Flow: Transform Your Business with Effective Working Capital Management

 

Working Capital Strategy?  Clients don't believe us at first, but believe it or not when it comes to business cash flow the Canadian business owner /manager has almost as many choices as there are types of apples!  Understanding key issues as well as getting the right working capital structure is key. Let's dig in.

 

INTRODUCTION

 

Working capital solutions are strategies and business financing solutions that a company can use to manage cash flow while ensuring the business has enough funds to cover day-to-day operations. A business can also focus on asset turnover strategies to optimize cash flows in the business. Whether it is optimizing inventory turnover or focusing on days sales outstanding while managing payables will all help a company secure financing in key areas of its business.

 

That working capital structure will be the lifeblood of a business and is typically measured by the difference in current assets and current liabilities on the balance sheet. Poor or negative working capital will often lead to financing distress in the business.

 

 

WHY IS BUSINESS LIQUIDITY IMPORTANT - 3 ASPECTS OF FAILURE IN A WORKING CAPITAL STRATEGY 

 

Your business liquidity is the company's ability to access cash or convert key current assets such as account receivables and inventory into cash - allowing your business to meet day-to-day obligations.  Business owners should monitor key ratios/relationships on the balance sheet and cash flow statement to better understand the financial health of the business - They will signal a company's ability to calculate working capital and address cash flow issues and protect from insolvency. 

 

Does the owner/finance manager really have to be over-worried when it comes to cash flow availability concerns?  When you don't address those issues what in fact can happen? Lots actually.!

 

We're the first to focus on the negative and downside but cash flow unavailability leads to:

 

Employee issues

 

Potential downsizing of your business

 

Inability to grow and expand

 

 

MORE CASH FLOW = BEATING THE COMPETITION!

 

Working capital structure and tools come from your ability to plan, analyze and make the most of using your assets to monetize capital.  Doing these sorts of things right often puts you well ahead of competitors, who we can assure you have their own problems!

 

 

Stay Ahead of the Game: Essential Working Capital Management Techniques

 

Those Bay Street folks call it the ' working capital ratio ' - which many lenders look at also. It's simply the relationship of short term assets to current liabilities, and believe us, you want more of the former! It's a short-term measuring stick for your cash flow and ability to pay short-term debt obligations such as leases, loans, suppliers/accounts payable, and employees!

 

Accounts receivables and inventory management are all about asset turnover, leading to more positive financial ratios that are acceptable to owners/lenders and those holding term debt on your company.

 

 

Revolutionize Your Business's Cash Flow with Proven Working Capital Techniques 

 

If there's any good news it’s the fact that growth and asset growth allow you to access more cash flow solutions. But you have got to know how to do that, what amount and type of financing you need, and what the cost of some of those solutions are.

 

CONVERTING ASSETS INTO CASH

 

The essence of working capital strategy and structure is knowing the amount of liquidity in your business. One of the greatest ironies of business is that a company can have abundant and significant assets, but if you can't convert those into cash, or monetize them with the right finance solutions ... well... you know the outcome of that.

 

So it’s the management of your working capital accounts (cash on hand or available, inventory, accounts receivable ) that allows you to stay in ' positive mode '. Oh, and by the way, those payables on the other side of the balance sheet can drastically affect your overall working capital and business cash success. Managing payables to the max in a positive manner affects cash flow from your operations!

 

  

THE CASH CONVERSION CYCLE   

 

Business owners in the SME sector quickly realize that your overall cash flow success drastically affects your sales, buying, planning, and asset acquisition. When you think of it all of that essentially becomes your whole ' cash conversion ‘ story -  in a term we use often it's really the story of how 1 Dollar flows through your company, from start to finish.

 

Remember also that your current or future lenders are looking at your cash flow ability all the time. They're evaluating their risk relative to the amount you are borrowing.

 

 

  

  

SOLUTIONS FOR YOUR WORKING CAPITAL STRATEGY AND STRUCTURE    

 

How can you address the right cash flow structure? Best solutions in a business loan  include, but are not limited to:

 

 

A/R Financing  -  Both  managing and financing accounts receivable properly will optimize your overall cash flow and working capital - funds from sales can be deposited into the business account the same day a company generates sales from its products or services

Inventory Loans  -  Inventory turns are key ensuring you are not tying up cash in excess inventories - Companies should focus on supply chain management and just-in-time inventories to ensure cost-effective inventory practices.

Access to Canadian bank credit

Non-bank asset-based lines of credit

SR&ED Tax credit financing - filed claims or even accrued expenses for r&d  can be financed in a sr&ed loan to aid in a company's liquidity around their research and development projects

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

 

Purchase Order Financing

 

Short-Term Working Capital Loans / Merchant Cash Advances  - A permanent working capital loan or short-term loans such as a  merchant cash advance will provide additional business liquidity and help the net working capital position when negative cash flow occurs. A personal guarantee and good credit score of business owners is required for ' MCA's"

 

Securitization

 

Government small business loans and grants are also available for many small business owners, and changes in the program in 2022 added significant borrowing capability to the program.

 

 WHAT FACTORS DETERMINE THE WORKING CAPITAL YOUR BUSINESS NEEDS 

 

Factors determining working capital business needs include -

 

The business model of your industry

The operating cycle of your business - ie how long does it take for a dollar to flow through the company- it is the timing around outlays of cash required to sell or produce goods and services to the time of receiving payment - every industry will vary

Efficiency and asset turnover  in receivables and inventory- Here is an excellent article by Harvard Business Review on internally managing cash

Cash Flow

Business goals of the owner

 

 

CONCLUSION - WORKING CAPITAL STRATEGIES TO BUILD A SOLID FOUNDATION FOR YOUR BUSINESS

 

Business owners know managing and financing working capital properly ensures short-term financial health - By monitoring key liquidity indications in your financial statements, a business can implement best practices of financing and managing working capital around key assets such as receivables, inventories, as well as obligations around account payable. 

 

Working capital loans and other funding solutions will strengthen a company's financial position and help ensure long-term success.

 

Call 7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with your working capital structure and needs.

 

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

What is Cash Working Capital

Working capital is the amount of cash and other current assets a business has available after all its current liabilities are accounted for. Understanding the working capital requirement how much working capital you have on hand to pay bills as they come due is critical to the success of an organization focused on working capital management.

  

What is the relationship between cash and working capital?  

 

Working capital represents the current assets minus the current liabilities on the company's balance sheet - known as the working capital formula. Current assets include cash and cash equivalents, inventories, and accounts receivable. The cash flow is a flow quantity that is generated by every financial transaction and has an effect on the liquid funds of the company from a goal of positive working capital for business needs and reflecting the importance of working capital.

 

 What are Working Capital Management Best Practices 

Effective management by small business owners of working capital involves closely monitoring cash, inventory, accounts receivables, and accounts payables. Optimizing these elements ensures a sufficient level of working capital to fund interest payments, allowing businesses to operate without disruption and allowing for potential business growth. Best practices for working capital management include improving collections procedures, maintaining optimal inventory levels, and negotiating favorable payment terms with suppliers. Additionally, businesses can explore various working capital funding solutions, such as lines of credit, invoice factoring, and trade financing. Cash flow projections will help project related expenses the company may incur.

 

How Does Managing Accounts Payables Affect Cash

Optimizing accounts payables management and other short-term obligations is a key factor in cash flow from operations - Payable terms can often be negotiated with suppliers and a business can reduce costs by taking advantage of prompt payment discounts.

 

 

 

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

The Power of Working Capital: How Commercial Business Finance Loans Can Propel Your Business Forward

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YOU ARE LOOKING FOR CANADIAN BUSINESS FINANCING

Commercial Business Finance Loans for Working Capital

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

 

 

 

UNLOCK YOUR BUSINESS POTENTIAL: COMMERCIAL BUSINESS FINANCE LOANS FOR WORKING CAPITAL

 

 

INTRODUCTION

 

Commercial business financing loans are a crucial part of allowing your business to meet its working capital needs. Those funds are needed to allow your company to fund day-to-day operational costs and meet obligations around inventories, accounts payable, payrolls, and rent and fixed debt payments.  We're taking a look at the types of business loans and how you can make the most of solid business finance strategies.

 

Recently we came across the thought that knowledge without wisdom is dangerous. Wow! That seemed to us totally applicable to thousands of Canadian business owners and financial managers who struggle to manage or find working capital and commercial business finance loans and solutions for their companies.

 

But what about combining knowledge with the wisdom of experience? Now that’s a concept! Yes, it might take some time to investigate a solution but boy, in the long run, wouldn’t it be worth it?

 

 

UNDERSTANDING WORKING CAPITAL LOAN SOLUTIONS 

 

Working capital loan financing can greatly enhance cash flow for businesses that have seasonality or sales that are cyclical in nature inside their business model and industry. The ability to access funding during off-peak periods of the business is essential as unpredictable revenue streams will create constant cash flow challenges.

 

It's never easy when Canadian business owners and financial managers are out there looking for solutions.  Although rates interest rates in Canada are generally perceived as 'quite low' the ability to access cash flow solutions is still a challenge.

 

WHAT ARE THE TYPES OF WORKING CAPITAL LOANS - WHICH ONE SUITS YOUR BUSINESS?

 

TERM LOANS -   A  term loan is a lump sum cash installment type of loan that is repaid over a specific period of time - It injects permanent working capital into the business.

 

BUSINESS LINES OF CREDIT -  A line of credit is a revolving credit facility that allows the company to draw on funds as needed under a pre-determined limit.  A business credit line can be sourced via a bank or an asset-based lender, and there are significant differences between the two facilities.  Businesses pay only on the amount of facility that is used, and, similar to other short-term working capital facilities they provide a solution to ongoing fluctuating cash flow needs.

 

Commercial bank facilities from Canadian chartered banks are the obvious solution. If your firm can withstand financial statement due diligence around historical profitability, ratios, covenants, and personal collateral of owners then you're clearly eligible for the lowest cost form of business financing in Canada.

 

Asset-based credit lines are a solid alternative to commercial bank lines of credit. Smaller and start-up firms can access basic working capital facilities that simply margin A/R and inventory in a combination type arrangement.

 

 

INVOICE FINANCING / FACTORING / CONFIDENTIAL ACCOUNTS RECEIVABLE FINANCING -  Businesses can fund unpaid invoices of immediate access to cash - Outstanding invoices are either ' sold ' or ' assigned' to a factoring company or a bank and this method of financing addresses the issues of late paying clients and the need of every company to invest in sales growth by carrying accounts receivables.

 

BUSINESS CREDIT CARDS / SHORT TERM WORKING CAPITAL LOANS / MERCHANT CASH ADVANCES via online lenders  -  Small business loans via business credit cards provide the convenience of accessing working capital as well as allowing companies to access finance under an interest-free grace period. Merchant cash advances via an online lender can fund retailers via projected future credit card sales and repayment from the business bank account is via daily or weekly payments from cash inflows to the business.

 

 

Revolutionize Your Business Operations with Working Capital Loans

 

 

All of the above financing solutions serve a unique purpose, and every business owner and financial manager should consider which options best suit the business needs of the company.

 

If your company has a solid asset base, and good cash flows from a historical perspective, then you of course have a stronger chance of being more successful in business financing.

 

On the other hand, if you find yourself experiencing hyper-growth, or coming out of a period of financial losses or turnaround scenarios then you need some help in both identifying and, even more importantly, accessing commercial business finance loans and solutions.

 

At the end of the day, your solutions boil down to traditional or alternative... it’s as simple as that.  Many new solutions that we focus on with clients are viewed as alternative, ( compared to traditional banks ) but the reality is that these types of financings are gaining traction every day.

 

That’s where the assistance of expert advice, coupled with wisdom and experience can really pay off we think.  Doesn’t it make sense that if you haven’t even heard of some of these cash flow solutions then you probably also don’t have the knowledge and expertise to comfortably access them?

 

 

THE PROS AND CONS OF WORKING CAPITAL FINANCING SOLUTIONS 

 

KEY BENEFITS -   Working capital financing is typically easier to access than long-term debt financing and unliked equity financing it is non-dilutive in nature, allowing a  company to access business capital without giving up ownership/control while funding daily commitments of the business and other operational costs.

Working capital loans offer several benefits and drawbacks that businesses should be aware of before making a decision.

Companies with a history of profit and cash flow can qualify for unsecured financing

 

DRAWBACKS - Some working capital solutions come with higher interest rates and loan costs , and in some cases may require additional collateral - Business owners will often have to demonstrate a strong personal credit history

 

Other solutions you can consider are :

 

LEASE FINANCING

PURCHASE ORDER FINANCING

SR&ED TAX CREDIT FINANCING

SECURITIZATION

 

Talk to the 7 Park Avenue Financial team about how these solutions work and how they can benefit your business.

 

THE IMPORTANCE OF WORKING CAPITAL FINANCING SOLUTIONS

 

Effective working capital management solutions are critical to the overall financial health  and business growth of your company. The ability to monitor and finance current assets and current liabilities around everyday business expenses allows your company to be efficient and eliminate the risk of a cash flow crunch, while all the time allowing the business to capitalize on growth opportunities.

 

Whether your company is early stage or a start-up or experiencing fast growth the right working capital loan will provide the necessary funds to expand and grow the business into current or new markets. The key is to ensure you have a financing solution tailored to your company's specific needs with repayment terms that make sense for your business.

 

 

CONCLUSION 

 

Every business needs the financial tools it requires to cover basic cash flow needs. Understanding the different types of cash flow management financing available and the requirements needed to apply for the best working capital loans for your business.

 

 

So, a bottom line? How about this - Experience and wisdom are a powerful combination in business  - Call 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing working capital wisdom with... you guessed it... experience in business financing options.

 

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

 

When You Should Consider a Working Capital Loan 

 

Businesses should consider working capital loan solutions when they are challenged to meet the financial obligations around  every day business expenses  - It is critical to use this type of financing for short-term needs, versus long-term investments in the business such as expansion or purchasing assets or technology 

 

 What are the types of Working Capital Loans?

Types of working capital loans include term loans, business lines of credit, and government loans under the Canada Small Business Financing Program small business loan via a participating financial institution such as a bank or participating credit unions, which now include lines of credit and working capital solutions (  for companies under 10 million in annual revenue or projected revenue), with no prepayment penalties. Loan amounts up to 1.1M dollars in total are offered under the program.

Invoice factoring/invoice discounting are financing solutions used by thousands of small businesses, with funds received the same business day for invoices generated to clients -  and some companies also consider short term loans under the merchant cash advance solution offered by some business lenders.

 

 

What is working capital? 

 

Working capital refers to the funding a company requires to finance day-to-day obligations. It is the difference between the current assets and the current liabilities on the balance sheet - Current assets are balance sheet assets that can be converted into cash and current liabilities are short-term obligations due within a year.

 

  

How is working capital calculated?  

Working capital can be calculated by the subtraction of current liabilities from current assets. This business calculation allows the business to determine if it has enough capital to fund expenses and obligations.

 What is working capital efficiency? 

Working capital efficiency is a calculation which measures how effectively a company uses working capital to fund sales growth and maximize profitability. By effectively managing asset turnover in receivables, inventory, and payables a company can generate sales growth with a minimum amount of working capital around short term business expenses.

 

  

What are the requirements for a BDC loan?  

 

Business Development Companies (BDC) is a Canadian government non-bricks and mortar business bank that provides business term loan financing via a predetermined credit limit to small business owners / SMB's that have good past credit history and profits. A business plan is often required, as are personal guarantees of the business owners, as well as a good personal credit score,  and their ability to invest owner capital in the business to secure loan financing. Minimum credit score requirements in the 650 range are required to get a working capital loan. The BDC does not offer a business line of credit.

 

 

 

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