Cash Flow Finance Solutions In Canada : Are You Part Of The Factoring & AR Financing Boom ?

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YOUR COMPANY IS LOOKING FOR  FACTORING A/R FINANCE!

ACCOUNTS RECEIVABLE FINANCING AND ACCOUNTS RECEIVABLE FACTORING 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

Email = sprokop@7parkavenuefinancial.com

 

Harnessing Accounts Receivable Financing Solutions: An Effective Solution for Business Cash Flow

 

Cash flow finance solutions in Canada are somewhat misunderstood and growing in popularity. To ensure you are a strong candidate for the A/R Financing boom it's, of course, necessary to understand what this short-term finance tool, aka ' factoring,' is all about

 

 

INTRODUCTION 

 

Accounts receivable factoring is a game-changer in business financing, providing a practical way for companies to stabilize their financial situation and drive growth. But what exactly does factoring entail, and how can it strengthen your company's cash flow?

Factoring and financing account receivables is crucial in managing liquidity by allowing businesses to sell their receivables. This enables a company to quickly access cash, reducing credit risk and improving cash flow. Additionally, the infusion of immediate capital empowers companies to fuel their expansion, covering daily operational costs and potentially expanding their product lines or services.

 

 

WHAT IS AR FINANCING FACTORING?

 

Accounts receivable financing through factoring is a financing method that enables businesses to promptly convert their unpaid invoices into immediate cash by selling them to a third-party company. This eliminates the need for businesses to wait for their customers to settle their invoices before accessing the funds required to sustain their operations. Instead, they can sell their invoices to a factor and receive a portion of the invoice value upfront.

 

Factoring AR financing is appealing, particularly for small and medium-sized businesses, as it offers a swift and streamlined alternative to traditional financing. It enables these businesses to quickly obtain the necessary funds without enduring the lengthy and often complex procedures associated with conventional financing. Furthermore, it saves companies valuable time and resources by relieving them of the responsibility of pursuing customers to pay outstanding invoices.

 

UNDERSTANDING THE ROLE OF THE FACTORING COMPANY IN CANADA

 

The terms  'factoring and accounts receivable ' are often intertwined and sometimes misunderstood - We're going to clarify some issues and debunk some of the misconceptions about how your firm can and should be financing its most liquid asset - accounts receivable! (Next to cash, that is!) So why would a small business need cash flow finance solutions? Let's dig in!

 

When a company can't leverage bank financing through traditional sources, and if they are unwilling to take on debt via working capital loans, then factoring is one solid solution to leverage cash flow and working capital. 

 

When appropriately financed, your accounts receivable can also help address other issues on your balance sheet, such as accounts payable and government super-priority payments. Key point - when financed properly!

 

WHAT IS THE DIFFERENCE BETWEEN FACTORING AND BANK FINANCING?

 

 

At 7 Park Avenue Financial, we get that a lot - Banks in Canada do not offer traditional factoring of accounts receivable. They use your invoices are collateral for a business loan.

Factoring companies purchase your receivables, while the bank registers security against your receivables and reserves the right to contact your clients for payment if you default on a loan.

 

The easiest way to understand it revolves around who owns your receivables, i.e. Banks or financial institutions that have purchased your a/r, or the factoring company. That's the most common misconception about accounts receivable factoring and a traditional bank loan or bank line of credit.

 

Factor solutions deposit the money into your business account usually the same day, or the next date latest, as you generate sales! The sale of A/R at your option is what factor finance is all about.

 

Bottom line? Accounts receivable financing is a loan, while factoring is simply the process of cash flowing through your sales. If a bank rejects financing for your business, factoring is an obvious solution and easily accessible as long as you understand the available fees and type of facilities.

 

The advance rate on factoring finance is usually in the 80-90 percent range, which we note is also much higher than a typical bank advance on receivables which tends to be in the 75% range for your company's AR.

 

 

 

ARE THERE ALTERNATIVES TO FACTORING  AS A CASH FLOW FINANCE SOLUTION  

 

As we have hinted, factoring via accounts receivable finance is not the only be-all and end-all solution. You can add new owner equity to your business or take on debt via a cash flow loan or term debt (Bridge loans or sales leasebacks come to mind).

 

Those, of course, are fixed options and must be met, come ' hell or high water' as your lender will note. So working capital solutions such as non-bank A/R financing add no debt to the balance sheet, yet they supply the needed cash.

 

Sales revenues via your receivables investment generate profits for your firm. The goal is to ensure that key assets - your sales & receivables are financed properly - keeping your balance sheet stable. Additional term debt can render your firm 'unstable’ given that not all customers pay immediately!

 

DON'T LET A LACK OF FINANCING LIMIT GROWTH PROSPECTS

 

Not all firms must secure and access business credit lines like bank facilities or commercial factoring solutions. However, when you don't, you'll often limit growth prospects. Self-financing companies are often viewed as stable and prosperous - it's just that without external financing, they don't often grow.

 

So the solution to growth finance. It's financing your accounts receivables as you generate sales. That helps to meet business goals, increase additional profits and grow the total value of your business.

 

ADDRESSING THE COST OF WORKING CAPITAL

 

When business owners / financial managers address the cost of external financing, several scenarios become very obvious:

 

-  Continue to self-finance and limit growth and competitiveness - including the apparent challenges around working capital and daily cash flows and payment of outstanding invoices

-   Borrow on a term debt or subordinated debt basis

-   Sell receivables as you generate them - increase sales and profits and capture all the opportunity costs of additional working capital

 

Somehow our third option remains more appealing!

 

So why do we not hear more about Canadian business owners who have discovered the holy grail of financing? When we talk to customers, we know the answer - they have entered the wrong factor facilities. By the way, every industry in Canada can access a/r financing if they are selling on a business-to-business basis for money.

 

WHAT IS THE BEST WAY TO FINANCE ACCOUNTS RECEIVABLE FOR A SMALL BUSINESS?

 

The fragmented U.S. influence on factoring in Canada has many firms entering into the wrong type of facilities. We advocate CONFIDENTIAL RECEIVABLE FINANCING, also called 'non-notification factoring' with no locked-in contracts and fair, competitive pricing from the financing company. You manage your receivables until the invoice is paid, and you control the number of invoices your firm sells as cash is needed for day-to-day needs of funds.

 

 

WHAT ARE THE BENEFITS OF  ACCOUNTS RECEIVABLE FINANCING  

 

• Fixing  cash flow gaps :

  • Businesses can access cash by selling outstanding invoices to a factor.

  • No need to wait for customers to pay invoices, improving cash flow.

  • Especially beneficial for companies with extended payment terms or slow-paying customers.

• Reduced Debt:

  • Factoring AR financing helps reduce debt compared to traditional financing options from a traditional financial institution

  • No need to take on additional debt through loans.

  • It helps maintain a healthy financial position and avoid financial strain.

• Increased Flexibility:

  • Factoring AR financing offers flexibility for businesses.

  • No collateral or strict credit requirements.

  • Businesses with less-than-perfect credit can still access financing.

  • Choose which invoices to sell, giving control over cash flow.

  • Particularly useful for businesses with seasonal cash flow fluctuations or unexpected expenses.

• Leveraging Client Credit History:

  • Factoring AR financing leverages the good credit history of clients.

  • Business credit history is not typically considered.

  • Allows businesses to benefit from their clients' creditworthiness and fund day-to-day operations, paying suppliers, etc

 

 

HOW DOES A BUSINESS QUALIFY FOR AR FINANCE FACTORING?

 

To qualify for factoring AR financing, businesses typically need to meet the following criteria: Creditworthiness. While factoring in AR financing does not require businesses to have perfect credit, they still need to demonstrate that they are creditworthy.

Factors will typically look at the creditworthiness of the business's customers when evaluating whether to purchase their outstanding invoices. Outstanding Invoices To qualify for factoring AR financing, companies must have outstanding invoices to sell to a factor. Factors will typically only buy invoices that are due within 90 days.

 

Factors will typically work with businesses that are profitable or have the potential to become profitable shortly.

 

CONCLUSION - CANADIAN BUSINESS FINANCING OPTIONS

 

Business owners should ensure they understand the benefits of customer invoice factoring and selling accounts receivables, which can be done via receivable recourse factoring or non-recourse factoring, depending on whether your business wishes to maintain the credit and bad debt risk in your A/R - Non-notification AR financing offered via many factoring companies proves that   Confidential receivables finance is a solid solution allowing you to bill and collect your accounts.

 

Accounts receivable factoring allows the business owner a solid and easy way to boost cash flows and eliminate cash flow problems as they generate additional sales before your customers pay the invoice. Numerous invoice finance solutions can address your business needs and be similar to a business line of credit with competitive pricing and service fees.

 

You can also access an asset-based credit line, which is a facility that allows you to borrow against the combined value of receivables, inventories, fixed assets and real estate if the latter is applicable.

 

Cash flow success is at the heart of small businesses in Canada.  Check out the benefits of selling invoices /financing accounts receivable and receivable finance by working with Canada's best factoring and accounts receivable factoring companies to address cash flow issues.

 

 KEY TAKEAWAYS -

 

Solution for Cash-Flow Crunches:

• • Factoring provides a quick alternative when traditional loans are not readily available.

  • Offers a quick injection of cash into the business to address cash-flow challenges.

• Fast Money Injection:

  • Factoring enables companies to raise money rapidly, providing immediate cash infusion.

• Streamlined Collections Process:

  • Factoring helps expedite collections, eliminating the need to chase overdue invoices.

• Debt-Free Financing:

  • Unlike conventional loans, factoring allows companies to generate funds without incurring new debt.

• Alternative for Challenging Bank Loan Qualifications:

  • Factoring is an excellent option for businesses struggling to qualify for a bank loan due to strict lending criteria.

• Assistance with Collection Efforts:

  • Factoring can support businesses with limited or non-existent collection departments.

• Improved Cash Flow and Timely Payments:

  • Factoring ensures fast payment, enhancing the business's cash flow and maintaining healthy supplier relationships.

• Stress Reduction for Critical Payables:

  • Factoring reduces the stress of meeting terms for important payables.

• Enhancement of Customer Portfolio:

  • Factoring often results in acquiring better-paying customers, leading to an improved customer portfolio.

 

  

CONCLUSION -

 

AR Financing: The Cash Flow Solution Your Business Has Been Waiting For!

 

 

Factoring AR financing/invoice discounting offers valuable benefits for businesses seeking swift cash access with outstanding invoices. Companies can enhance cash flow, reduce debt, and gain flexibility by selling these invoices to a factor. However, businesses must evaluate factors such as fees and other considerations when selecting a factoring company. This guide equips businesses with the necessary information to decide on the suitability of factoring AR financing for their specific needs.

Speak to 7 Park Avenue Financial,  a trusted, credible, experienced Canadian business financing advisor who can assist you with your capital and cash flow needs with tailored financing services.

 

FAQ: FREQUENTLY ASKED QUESTIONS

 

What is factoring?

The cash flow solution known as factoring is an AR Financing financial solution that allows a company to sell receivables to a third party for cash via a financing company, ' the factoring company. ' Factoring companies buy the receivables at a discount, not an interest rate but a ' factoring fee. '

 

How does accounts receivable factoring work?

You send invoices to the factoring company as your business sells its products and services. Your business receives 80-90% of the invoice value immediately, and the remaining balance is paid to you when the customer pays the invoice - less a factoring fee in the .75-1.5% range.

 How can accounts receivable factoring benefit my business? 

 Accounts receivable factoring provides immediate cash flow, which can help businesses meet urgent financial obligations. It also reduces the burden of debt collection and relies on the creditworthiness of your clients rather than your credit history. Furthermore, it can support business growth by providing the necessary funds to invest in new opportunities.

 

  

Are there any downsides to accounts receivable factoring?  
 

Yes, like any financial solution, factoring has some downsides. These include the factoring fees you must pay, which may result in receiving less money than if you waited for the customer to pay. It's essential to weigh these costs against the benefits for your specific business situation.

  

What types of businesses can benefit from accounts receivable factoring?   

 

Any business generating B2B or B2G invoices can benefit from accounts receivable factoring. This includes businesses in various industries like manufacturing, transportation, wholesale, and more. It can benefit small to mid-sized companies or those with cash flow challenges.

Any business generating B2B or B2G invoices can benefit from accounts receivable factoring as the factoring company pays the company a cash advance as sales and invoices are generated. These cash advances ensure positive cash flow for the company. This includes businesses in various industries like manufacturing, transportation, wholesale, and more. It can benefit small to mid-sized companies or those with cash flow challenges.

 

 What is Recourse Factoring? 

Recourse factoring is when a business sells its outstanding invoices to a factor but remains responsible for collecting payment from its customers. If a customer fails to pay an unpaid invoice, the business must buy back the invoice from the finance company.. Recourse factoring is typically less expensive than non-recourse factoring but carries more risk for the company.

 

 What is Non-Recourse Factoring 

Non-recourse factoring is when a business sells its outstanding invoices to a factor, and the factor assumes the risk of non-payment by the customers. If a customer fails to pay an outstanding invoice, the factor absorbs the loss, and the business is not responsible for paying the invoice. Non-recourse factoring is typically more expensive than recourse factoring, but it carries less payment risk for the company.

 

 What are Common Misconceptions About Factoring AR Financing 

 

There are several common misconceptions about factoring in A/R financing. Here are a few of the most common:

 

Factoring AR Financing is a Last Resort

Many businesses believe that factoring receivables is a last resort and should only be used when all other financing options have been exhausted. However, factoring AR financing from commercial finance companies can be a viable financing option for businesses of all sizes and stages of growth.

Factoring AR Financing is Expensive

While factoring AR financing can be more expensive than traditional financing options, it is often more affordable than taking on additional debt or missing out on business opportunities due to cash flow shortages. Factoring AR Financing is Complicated

Factoring invoice financing is often less complicated than traditional financing options. The process is straightforward, and the accounts receivable factoring company/finance company typically handles much of the administrative work involved in collecting payment from the customer. When traditional notification factoring is utilized, the factoring company takes responsibility for collections.

 

 

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

Breaking Through Cash Flow Constraints: Unleash Your Business Potential with Purchase Order Financing

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YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!

Unlocking Growth Potential with Purchase Order Financing: A Comprehensive Guide

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

 

From Orders to Profits: The Game-Changing Power of Purchase Order Financing

 

Purchase order financing & Receivable Finance via a direct A/R funding solution  are two key ways for Canadian business owners and financial managers to maximize working capital via key financeable assets - in this case, either :

 

Accounts Receivable

Fund Purchase Orders / Contracts

 

If they can't fund these two asset categories, their firm will risk serious working capital and cash flow deficiencies.

 

 

INTRODUCTION 

 

 

Purchase Order Financing is a game changer for businesses struggling with cash flow management. It allows companies to access the necessary funds to fulfill orders without relying on their resources. This financing option is particularly beneficial for small businesses with limited access to traditional financing due to size or credit history. This article will explore the benefits, workings, and relevance of Purchase Order Financing for small businesses in today's competitive marketplace.

 

 

To paraphrase one of the most famous lines ever written - 'it's the best of times and the worst of times ... that being the case when sales and profit potential is great but owners are challenged by key issues such as :

 

- New owner equity or outside equity

- Debt (loans)

- Operational efficiencies

 

We will focus on that third area - improving operational efficiencies via proper financing of your current assets and sales. By the way, believe it or not, that’s the cheapest way to finance your firm - given the higher cost of long-term debt and the even higher cost of bringing in outside equity.

 

You can increase bottom-line profits and optimize cash flow by leveraging your current assets - typically A/R and inventory-.

 

WHY IS PO FINANCING A BUSINESS GAME-CHANGER?

 

Purchase Order Financing is a game-changing funding option that helps small businesses manage cash flow by providing access to the necessary funds for fulfilling orders. This financing method enables businesses to accept larger orders, expand operations, and overcome cash flow constraints, in particular, benefits small businesses with limited access to traditional financing options. This article will explore the benefits, workings, and role of Purchase Order Financing in helping small businesses thrive in a competitive marketplace while ensuring suppliers' costs on orders can be funded.

 

HOW DOES PURCHASE ORDER FINANCING WORK?

 

Purchase Order Financing is a funding solution designed to assist businesses in fulfilling customer orders by providing the necessary cash. The process operates as follows: when a business receives a purchase order, it is submitted to a Purchase Order Financing company. Subsequently, the company disburses funds to the business for purchasing the required raw materials or inventory. Upon completing the order and receiving payment from the customer, the business repays the Purchase Order Financing company, including any applicable fees or interest.

 

AN EXAMPLE OF A  PURCHASE ORDER  FINANCE SOLUTION 

  

 

 

If you choose a purchase order financing facility, you can take on larger contracts and generate more profits for your firm. Overall larger orders and contracts also increase your competitiveness in your industry - with typically your competitors wondering how you do it!

 

By utilizing a p.o. financing strategy, you allow the p.o. Finance firm to pay suppliers for goods and services, you need to facilitate the order.  When your product is shipped and delivered, the purchase order finance firm is paid via your bank or A/R Financing facility. 

 

Although to many, the perception is a higher cost of financing, let’s look at what has happened - you have converted inventory into A/R into cash - Payment by your customer generates profit. Without the funding for the purchase order, you often could not have fulfilled such large orders or contracts. So by sacrificing some gross margin, you have grown revenues and bottom-line profits.

 

Firms that have a significant investment in inventory can achieve similar financial success.  With an inventory financing facility, you can stock more products and generate those additional sales.

 

For firms who cannot achieve the traditional bank financing sought by most, a combination of inventory and receivable financing facilities is available via an asset-based line of credit.   Here it's all about the 'cash conversion cycle' - turning A/R and inventory into cash and profits.

 

The higher interest rates charged by asset-based lenders can easily be significantly offset by smarter volume purchasing and negotiations with key suppliers on pricing: Bottom line - you now have the cash to pay for products and services.

 

The cost of not taking discounts or being unable to make volume purchases for cash is significantly great than the financing costs you have for alternative financing facilities such as inventory financing, purchase order financing and receivable financing.

 

KEY POINT:

 

Even if purchase order, inventory, and receivable financing were equal in cost to carrying receivables and inventory on your books, it would still be a viable solution because you would have fewer sales and less competitiveness in the marketplace.

 

For example - if your firm could buy $500,000.00 of inventory on 2% net ten-day terms and you could not take the discount, the opportunity cost of not taking that discount is over 36%.

 

Our simple statement to clients is as follows: ' The cost of paying in full is usually much higher than the cost of borrowing!

 

 

BENEFITS OF PURCHASE ORDER FUNDING SOLUTIONS 

 

Purchase Order Financing offers several advantages for businesses. It enables them to accept larger orders and grow operations without worrying about cash flow limitations, benefiting small businesses with limited access to traditional financing. Additionally, it helps improve supplier relationships by ensuring timely and full payments. Another advantage is the quick and easy accessibility of Purchase Order Financing compared to traditional loans, making it ideal for seizing new opportunities or fulfilling urgent orders.

 

 

COMPARING P O FINANCING VERSUS TRADITIONAL BUSINESS LOANS 

 

Purchase Order Financing differs from traditional business loans in several ways. It is based on the purchase order rather than the business's creditworthiness, making it accessible to companies with limited credit history or poor credit scores who can't qualify for other small business loans from a traditional financial institution. Furthermore, Purchase Order Financing is typically faster and easier to obtain as the focus is on the creditworthiness of the customer placing the order rather than the business itself. Invoice factoring/invoice finance and a merchant cash advance are alternatives to po funding. Still, they do not solve the challenge of cash flow to purchase inventory/products and facilitate business growth.

 

CONCLUSION -  THE FINANCIAL BOOST OF PURCHASE ORDER FINANCING

 

Purchase Order Financing is a game-changing solution for small businesses seeking growth opportunities. It enables companies to access the necessary cash to fulfill larger orders, overcome cash flow constraints, and strengthen supplier relationships. While there are associated fees and interest, they are typically lower compared to traditional business loans. For small business owners aiming to expand operations, considering Purchase Order Financing can be highly beneficial. Understanding its intricacies provides a competitive edge and sets the stage for success in business finance.

 

If your firm is focused on selling more efficient financing around asset turnover and proper focus on the opportunity cost of working capital - Talk to  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help you determine the exact working capital/cash flow strategy around your company needs.

 

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

 

What is purchase order financing, and how does it work?  

Purchase order financing gives businesses the capital to pay suppliers upfront to fulfill large orders. The process involves three key parties: the borrower (business), the lender (purchase order financing company), and the supplier. The lender evaluates the purchase order and the creditworthiness of the buyer and supplier, approves a percentage of the supplier costs, pays the supplier directly, and ensures the order is fulfilled. The financing company deducts fees and financing costs and remits the final payment to the company.

  

What are the advantages of using purchase order financing?  

The advantages of using a  po financing company for purchase order financing include the ability to fulfill large buyer orders, support for established and growing firms, and assistance in the supply chain process. Using solutions from po financing companies to accept orders they may have rejected due to cash flow constraints helps maintain customer and supplier relationships. It benefits industries with high-margin transactions such as manufacturing, retail, and import-export.

  

Are there any drawbacks or limitations to purchase order financing?  

Limitations of purchase order financing include its suitability primarily for industries dealing with physical goods and high-margin transactions. It may not be ideal for service-based businesses or those dealing with small buyers and purchase orders. Additionally, the cost-effectiveness of purchase order financing depends on the specific circumstances and profitability of the transactions involved and the length of time around when the customer pays.

 

 How can purchase order financing contribute to a business's growth potential? 

 

Purchase order financing can contribute to a business's growth potential in several ways. It enables the business owner to fulfill large orders, expand their customer base, and increase sales. By releasing working capital, businesses can invest in expansion efforts such as acquiring new assets or entering new markets. Accepting orders that would have been declined due to cash flow constraints helps build customer loyalty and strengthens relationships with buyers and suppliers, fostering long-term growth.

 

 What are the benefits of  P O FINANCE? 

 

The benefits of a  purchase order financing agreement for small businesses include access to funding that enables them to take on larger orders and grow their operations without cash flow constraints. It also helps improve supplier relationships by ensuring timely and full payments, especially for small businesses with limited purchasing power compared to larger companies. Additionally, purchase order financing is relatively fast and easier to obtain than traditional business loans, allowing small businesses to seize opportunities or fulfill urgent orders.

 

 

 What are the qualifications for Purchase Order Financing Companies? 

To qualify for purchase order financing, businesses typically need to meet specific requirements, including having a customer's purchase order for a tangible product, having a sufficient profit margin on orders to cover financing costs, and having a track record of fulfilling orders on time and in full. These qualifications help ensure the viability and reliability of the business when dealing with purchase order financing companies.

 

 

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

Navigating the World of Restaurant Franchise Loans

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YOU ARE LOOKING FOR FRANCHISE FINANCE ASSISTANCE!

Money Matters: Key Financial Insights into Restaurant Franchising

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

 

The Nuts and Bolts of Restaurant Franchise Finance

 

Franchising  Financing in Canada. Whether it’s an 'IT' franchise in the world of technology, or a restaurant in the quick service / full service / casual service industry everyone it seems wants to get on board. If they know they have the ability to finance the business...so let’s examine some creative ways in which to complete the financing of the entrepreneurial dream.

 

 

INTRODUCTION

 

According to industry experts the  expanding restaurant industry is attracting many entrepreneurs to consider franchising as their entry point. Despite this opportunity, securing financing for a restaurant franchise can be a challenging endeavor due to  loan and financing options available.

It's no secret to the potential franchisee that it's all about cash - a combination of your own and borrowed funds.  What are some of the methods that clients use to creatively, yet sensibly finance the franchise dream in Canada around your business needs?

 

DEBT AND EQUITY

 

Every business in Canada, new or existing, has two components to the capital structure. Debt... and equity. Equity is of course your portion; debt is of course that contributed by your lender or lenders. And remember, you have the upside potential in equity... your lender has only the interest income, and the hope and belief that they will be paid in full. Working capital post franchise acquisition is important also.

 

STARTUP COSTS AND FRANCHISE FEES

 

The initial capital needed to establish a restaurant franchise can be substantial. Prospective franchisees must anticipate costs related to the franchise fee, leasehold improvements, furniture, fixtures, equipment, and starting inventory. These initial expenditures form the bedrock of restaurant franchise financing, providing a springboard for all future financial transactions and considerations within the franchise operation.

 

That's one of the reasons that many franchisee 'newbies' in fact get overly enamored with the financial potential of their business when pitching a franchise finance scenario. We think they would do better often to tone it down a bit and focus more on the lender's ability to feel comfortable that cash flow will cover the loan or loan payments.

 

In talking to clients over a long period of time we've been intrigued by the manner in which customers come up with their portion of the funds, the equity.  Sometimes it's savings, other times they are leaving corporate life and utilizing their severance from the previous employer.

 

In other cases there is 'friends and family' - we see that a lot. In order to be truly creative in using funds from friends and family (it hasn’t escaped us that they are in fact your 'angel investors') you need to be sure these funds aren't documented as formal debt - otherwise your banker or lender will have to show this on your personal balance sheet as debt, which will affect some of your borrowing ratios.

 

Supplementary to this strategy is getting a minority operating or silent partner in the business. Giving up a small amount of equity, say 5-10% might induce a family member or third party to help you out.

 

Typically the collapsing of registered savings plans is viewed by most as not, we repeat, not the best way to finance a franchise. Two reasons here actually, one is the huge tax bite involved in such a move; the other is simply that you have put your savings at risk, which clearly is not optimal.

 

Other creative ways to complement franchise financing in Canada are to consider supplementary forms of financing such as equipment lessors for certain assets, or merchant receivable firms for ongoing cash flow. They are complementary to your overall finance strategy.

  

GOVERNMENT BUSINESS LOANS - FEDERALLY GUARANTEED SMALL BUSINESS LOANS TO ACQUIRE A FRANCHISE!  

 

Is there one way to really move along quickly in franchise finance in Canada? How about a co-signer, and boy do we have one for you. It's the Government of Canada, via Industry Canada’s BIL program, with the government in effect guaranteeing a huge portion of your loan in the franchising Canada environment.

 

Prospective small business owners should not overlook this one !  SBL loans are structured as long term loans with competitive financing costs /interest rates allowing you greater control around fixed or variable rate choices.

 

So, a service franchise, such as in the IT (information technology) industry, or a restaurant... it’s your call when it comes to selecting and finalizing the franchise dream. Just make sure you have considered all options, traditional and alternative when it comes to 'creative‘.

 

 

 

CONCLUSION -  UNDERSTANDING THE FINANCIAL LANDSCAPE IN  FINANCING A FRANCHISE

 

Embarking on a restaurant franchise venture is an exciting endeavor, but it requires a solid understanding of restaurant franchise finance. Knowing the costs involved, the potential profitability, the financing options, and the risks can greatly aid entrepreneurs in making informed decisions and ensuring the financial health of their franchise.

 

Call  7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor for franchise finance advice that gets you to the goal line of success. Talk to the 7 Park Avenue Financial  finance team about your  restaurant finance  franchise finance financing needs. We'll work with you with a collaborative approach to your business needs.

 

FAQ:FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

What are types of Franchise Loans In Canada

 

1. Canada Small Business Loan Program : Provided by participating lenders and partially guaranteed by the Government Of Canada  -These loans are popular due to their lower interest rates and extended repayment terms. If the borrower defaults, the government  covers a part of the lender's losses.

2. Traditional Bank Loans: These are offered by banks and other financial institutions and usually require collateral. Interest rates and repayment terms can differ greatly based on the lender and the borrower's credit score.

3. Equipment Financing: This loan type, specifically for purchasing equipment and machinery needed for the restaurant franchise, is usually secured by the equipment itself. These loans generally have shorter repayment terms.

4. Alternative Financing: With options like online lenders and peer-to-peer lending platforms, alternative financing has grown in popularity recently. While they offer more flexible terms and faster approval times, they might also have higher interest rates and fees.

 

 

 How do you qualify for a franchise loan?   

Key factors that lenders evaluate while considering loan applications include:

1. Credit Score: Lenders typically require borrowers to have a good credit score, indicating financial responsibility and a track record of timely debt repayments.

2. Business Plan: Applicants need a robust business plan encompassing detailed financial projections, a marketing strategy, and a comprehensive description of the franchise and its operations.

3. Collateral: The franchise agreement often serves as collateral for the loan. Lenders evaluate the value and potential profitability of the franchise to determine the loan amount and repayment terms.

4. Experience: Borrowers' experience in the restaurant industry is also considered. Prior experience in managing a restaurant or working in the industry can convince lenders of the borrower's ability to successfully operate a franchise.

 

 

What are common mistakes in applying for restaurant franchise loans

Common mistakes entrepreneurs should avoid when applying for a restaurant franchise loan:

1. Not Researching Lenders: Neglecting to research lenders and their loan products could lead to higher interest rates, unfavorable terms, and a complicated loan application process.

2. Overestimating Revenue Projections: Overestimation can lead to requesting unrealistic loan amounts and consequently, a higher risk of loan default.

3. Failing to Prepare a Solid Business Plan: A comprehensive business plan is crucial for a restaurant franchise loan application. Insufficient planning and details can lead to loan application denial.

 

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

Working Capital Financing : Study Finds .... Your Business Needs It!

 

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YOUR COMPANY IS LOOKING FOR CANADIAN WORKING CAPITAL FINANCING! 

WORKING CAPITAL FINANCING  BUSINESS LOAN SOLUTIONS IN CANADA

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

 

 

The Secret Sauce of Successful Businesses: Understanding Working Capital Financing 

 

Working capital financing alternatives are necessary to finance your growth... or if you're not growth-obsessed, just your survival. As our 'study' says - your business needs it. Let's dig in on all you need to know about the types of working capital financing!

 

 

 

INTRODUCTION  

 

Every business owner knows cash flow is the lifeblood of a company - but as business grows cash gaps occur  between sales and cash - Working capital finance solutions fund short term expenses and help prevent financial failure - Ensuing you understand the mechanics and value of tradition and alternative financing solutions is key.

 

HOW DO YOU DETERMINE YOUR WORKING CAPITAL NEEDS

 

 

Understanding  how much funding you actually depends on factors such as current cash position, short term needs, and long term investment goal - The working capital ratio ' formula '  simple -  On the balance sheet subtract current liabilities from current assets - this shows how much working capital is available - but business owners should ensure they take into account asset turnover in accounts receivable and inventory , as well as seasonality  and unexpected expenses.

That's where maintaining cash flow projections around sales and collections is critical - as well as monitoring your  cash conversion cycle, DSO , etc.

 

  

WHY IS WORKING CAPITAL IMPORTANT  

 

Ensuring  you have enough cash allows your business to meet short term obligations around liquidity and operating expenses . This sustains overall viability  and avoids financial strain and operating difficulties. The ability to bridge the gap between outgoing expenses such as payables against income receivables helps a business manage better on a day to day basis , while also considering business growth .

 

 

 

Expansion of your business via increased sales, new orders, contracts, etc., always demands more cash in the funding of your day-to-day activities. There are traditional and non-traditional ways for you to achieve business financing success. 

 

REVOLUTIONIZE BUSINESS OPERATIONS WITH WORKING CAPITAL CASH FLOW FINANCING

 

 

At 7 Park Avenue Financial more and more of our  clients realize that many non-traditional forms of working capital are become very traditional based on new alternatives available to finance your business and address short term funding needs around accounts payable and other short-term obligations.

 

Cash flow and working capital needs are being achieved more and more today by financing strategies for small businesses that were either unheard of, non-existent, or frowned upon in previous years regarding other business loans and finance solutions.

 

WORKING CAPITAL BUSINESS LOANS IN CANADA

 

Let's recap some of those traditional and non-traditional sources of financing. Suppose you feel you need assistance to understand the wide variety of solutions available for your firm. In that case, we strongly recommend that you talk to 7 Park Avenue Financial, an experienced, trusted, and credible business financing advisor to ensure you have choices.

 

 SMALL BUSINESS FUNDING 

 

Those alternatives for working capital finance funding options:

 

A/R financing - accounts receivable financing solutions - invoice financing that mirrors the credit line solution for funding business needs - Same business day funding for your sales/outstanding invoices - daily sales can be funded via the accounts receivable factoring solution.

 

SR&ED tax credit bridge loans - financing for your r&d costs in the development of new products and services

 

PO / Contract financing

 

Non-bank full business line of credit facilities -  abl business line of credit

 

Merchant cash advances/short term working capital loans - Financing  based on monthly sales - good credit score of owners required! These facilities can be accessed in a relatively short period with flexible repayment terms structured to your sales and cash inflows - these loans are on shorter terms, typically 12 months with monthly or weekly payments based on sales history.Many online lenders offer this financing option.

 

Equipment Leasing - address your needs for new equipment or technology via leasing companies or term loans for asset acquisition from traditional banks.

 

 

Bottom line? Therefore creativity and access to capital become a priority for the business owner to get working capital and avoid a negative working capital situation.

 

We're told that banks are lending again. If you believe that (sometimes we're not quite sure!), focusing on business bankers actively and aggressively looking for your business is essential.

 

 TRADITIONAL FINANCING OPTIONS 

 

For companies that qualify for bank traditional financing options solutions for cash flow include working capital term loans,  business lines of credit, business credit cards - etc.

 

Bank financing is one of the least expensive financing areas, but of course, it comes with loan covenants, ratios, and personal guarantees. Those very issues are why many Canadian business owners prefer to consider non-bank and independent finance company options.

 

GOVERNMENT LOANS / THE CANADA SMALL BUSINESS FINANCING PROGRAM

 

When it comes to banks, we'll also mention not to forget the CSBF loan, which in our opinion, is, bar none, the best business financing in Canada for companies with revenues less than 10 Million dollars. (Also called the Government Small Business Guaranteed Loan program). The program services a very specific need for early-stage businesses, franchises, etc.

 

 Real estate can also be financed under the program, and no personal assets are taken as security! Repayment terms are typically  2-5 year term loans with fixed installments. Interest rates are attractive under the program and a solid business plan is required, outlining your needs in the 3 financeable asset categories of equipment, real estate, and leasehold improvements. A minimal personal guarantee is required by borrowers.

 

In 2022 major changes to the SBL  program added numerous cash flow/working capital/line of credit financing to the program.

 

The term loan structure is the only alternative under SBL loans, the program is not a line of credit or lump sum cash loan. The total amount available is 350k, which is 1 Million dollars if real estate is financed. It's an excellent way to take advantage of attractive long term financing for your need to cover specific asset requirements or financing of leaseholds.

 

As a business owner, you can also consider putting new permanent capital into your firm via your own saving or a partnership with an associate or strategic partner - i.e. getting a supplier to provide financing via extended terms.

 

We also wish to point out that business working capital is somewhat generic and means many things to many people. The textbook tells us that you have the magic' working capital' number if you take your current assets and subtract your current liabilities.

 

That's great, but the actual number of ratios you get has no real meaning. The solution is simply analyzing your receivable and inventory turnover in conjunction with your accounts payable demands.

 

The textbook calls this your cash conversion cycle - but it brings real meaning to your day-to-day financing needs as it will show you how long it takes for one dollar to flow through your company from order to cash. Measuring those asset turns helps uncover the need for working capital loans.

 

 

 

  

CONCLUSION - WORKING CAPITAL FINANCING FOR THE ENTREPRENEUR  

 

Funding working capital properly is a business tool for managing  cash flows of your business - Understanding what types of traditional and alternative lending solutions work for your business is critical - allowing the company to cover expenses and grow sales revenues  - Different types of solutions are available based on the financial health of your business and its operational needs in your industry.

 

Small business owners are keenly aware of the importance of good cash flow. At that point, you can consider various strategies to improve cash flow based on your operating cycle of collections, inventory on hand, and supplier payment terms.

 

Working capital - it's essential; it's available to address your business growth and potential for new markets and customers  -  for more information, talk to the  7 Park Avenue Financial team  about our business financing services to understand your cash flow options to allow you to meet your financial obligations via solutions from traditional lenders and the new world of alternative business financing to address your particular business credit profile.

 

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

 

What is the role of working capital in business operations?

 

The role of working capital, also known as net working capital, in business operations is to finance day-to-day expenses. This includes paying for utilities, rent, salaries, and inventory. It essentially fuels the everyday operational functions of a business, ensuring that it can meet its short-term obligations.

 

How does a working capital loan differ from a regular loan?

 

A working capital loan is specifically designed to finance the daily operations of a company. Unlike a standard business loan, which can be used to invest in long-term assets or other large capital expenses, working capital loans are intended to provide short-term liquidity. They help businesses cover routine expenditures such as accounts payable and wages.

 

What are some common sources of working capital funding?

Common sources of working capital funding can be categorized into internal and external sources. Internal sources include retained profits and reducing current liabilities. External sources range from short-term loans, trade credit, merchant cash advance,  factoring, and invoice discounting. Businesses may also use bank overdrafts or establish a business line of credit. Lines of credit allow the business to pay interest on only funds drawn under the revolving credit  facility which can be unsecured or secured depending on the lender.

 

What are some benefits and risks associated with the aggressive approach to working capital financing?

The aggressive approach to addressing the  working capital ration in finance  entails keeping a lower level of current assets compared to current liabilities on a company's balance sheet. This strategy can potentially lead to higher profitability due to a lower cash-to-cash cycle time and higher asset turnover. However, it also carries a higher risk of liquidity problems. If the company cannot convert its assets into cash quickly enough, it may face difficulties meeting its obligations.

 

How does invoice financing work as a form of working capital finance?

Invoice factoring is a popular short term financing  method allowing  businesses to borrow money against unpaid invoices /  amounts due from customers.  It is not a small business loan per se, but a monetization of receivables on the balance sheet.Companies sell their accounts receivable (invoices) to a third-party company at a discount. This provides businesses with immediate cash, which can be used to cover operational expenses, thus improving their cash flow. It is particularly useful for businesses that have longer payment terms or those that struggle with late payments, or companies that don't qualify for a business revolving line of credit.

 

 What are three working capital strategies for a business? 

Three Working Capital Financing Strategies

1. Conservative Approach: This approach involves maintaining a higher ratio of current assets to current liabilities around short term business financing needs Although safer, this method can potentially yield lower profitability.

2. Aggressive Approach: Here, the business maintains a lower level of current assets to current liabilities. It may lead to higher profitability, but it also brings about a higher risk of liquidity problems.

3. Moderate Approach: This strategy strikes a balance between the conservative and aggressive approaches, maintaining a moderate level of current assets to current liabilities.

 

 

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

Unlocking the Power Of Business Financing Cash Flow: Discover Cutting-Edge Business Financing Solutions and Finance Alternatives

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YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!

Beyond Traditional Loans: Exploring Innovative Finance Options for Your Business

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

Financing & Cash flow are the biggest issues facing  the business owner 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

 

 

BUSINESS FINANCING ALTERNATIVES IN CANADA 

 

 

Business financing ensures small business owners have the 'fuel' to operate and grow their companies.  But do some owners/financial managers sometimes fool themselves by thinking their current cash flow and finance alternatives work? We believe that might be the case regarding bank loans, cash flow lenders, and business finance.  Many options In cash flow based lending might be a good choice for your company. Let's dig in.

 

 

INTRODUCTION  - CASH FLOW BUSINESS FINANCING ALTERNATIVES IN CANADA

 

Whether you are bootstrapping your business for cash flow, every business owner knows that cash flows are vital to long term success - Understanding your alternatives that can help your business run smoothly and knowing what is available is key.

 

Companies with different types of assets require a complete understanding of how those assets can be liquidated, acquired, or monetized.  Sometimes, traditional bank loan lending might give your firm the lending solution you need. That's up to the bank and other lenders, for the most part, based on the overall financial condition of your business. In the long run, you might find that your financing is best suited to a non-bank alternative lender.

 

WHY ALTERNATIVE FINANCING? ALTERNATIVE BUSINESS FINANCING VS TRADITIONAL FINANCING

 

Business owners view banks as the go-to solution for secured and unsecured loans. However, banks will often require collateral to secure financing at the low rates provided by banks. However, banks typically only lend to companies with solid credit history, profits, and cash flows for repayment. Business owners also know that accessing approval on bank financing is very time-consuming.

 

Traditional business financing includes term loans and lines of credit from a bank or credit union. Commercial banking approval rates from banks are lower than those of alternative lenders. Approvals from banks may take a longer time.

 

Alternative lenders charge a higher premium if they offer funds to underfunded businesses. These lending methods are easier to apply for online. A business loan from a bank usually has a lower interest rate and a longer repayment term than alternative lending. You typically need at least two years in business to get a bank loan.

 

For those that can't access all (or any?!) of the finances, they need a revolving line of credit from an asset-based lender that will allow your firm to secure the type of cash flow/working capital you need.  It should also never be forgotten that simply managing payables and maximizing supplier credit is a key to overall cash flow management.  Companies with the potential to secure new large orders/contracts should also consider export guarantees or PO financing as an alternative to a small business loan.

 

There are some more esoteric and not always-considered options that, in the past, have been more exclusive and reserved for larger companies. These include 'securitizing' your sales or considering a convertible debt solution. That's another example of how alternative lenders provide business finance solutions to capital and cash flow needs.

 

A more commonly accessed type of funding for a cash flow loan is mezzanine finance, essentially unsecured cash flow loans. They are often reviewed as a 'bridge'; between debt finance and the dreaded 'equity' dilution that is not desired by owners wishing to retain full ownership and control.

 

 

 

HOW TO INCREASE CASH FLOW WITH ALTERNATIVE FUNDING  - ALTERNATIVE  SMALL BUSINESS LOANS 101!

 

Some individual and unique 'subsets' of asset-based alternative loan  strategies include:

 

Confidential Receivable Financing / Invoice financing for outstanding invoices/accounts receivable- this financing method is one of the most popular and accessible business funding solutions in Canada and a solid alternative to lines of credit for business.

 

It's a financing option that is paid back based on sales growth and helps to build business credit  - no debt is added to your balance sheet. Significantly less time in applying and approval is a big plus, unlike bank loans, which might take several months for many common types of bank financing.

 

The amount of money you can borrow under this funding method is unlimited and related to your sales growth and asset turnover in accounts receivables. Factoring is a practical solution for businesses with unpaid invoices - allowing the company to gain immediate cash flow. Invoice discounting/invoice factoring is Canada's most popular accounts receivable financing method.

 

Non-Bank Asset-Based Lines of Credit - Asset-based lines of credit via asset based lending is another popular non-bank option - providing revolving credit facilities and allowing the business to pay interest only on funds borrowed, given that the credit line fluctuates and replenishes with cash inflows. Asset-based lines of credit are secured by business assets such as receivables, inventories, fixed assets and commercial real estate - unlike a bank business line of credit which is typically unsecured.

 

Purchase Order Finance - Purchase order financing allows businesses to access capital when they receive large purchase orders or contracts - Business lenders provide funds required to fulfill orders, and lenders are repaid when customers pay. Supply chain financing and purchase order funding / Order fulfillment loans are creative ways to fund growth.

 

Inventory  Financing  - Financing inventories allows a business to leverage inventory to secure business funding - inventory financing for stock-based loans is often combined with receivables in a line of credit facility.

 

Revenue Based Financing - Revenue-based financing is a flexible approach to capital - Funding is based on a percentage of future revenues, giving a business a revenue-sharing financing approach without taking on debt on the balance sheet. Revenue-driven loans are prevalent in the ' software as a service industry.

 

Equipment Financing - The best acquisition tool for financing long-term assets for the small business owner - the most common leases are capital ' lease to own' options or operating leases signifying more of a short-term rental situation.

 

Royalty finance

 

Merchant Cash Advances  / Short Term Working Capital Loans for Small Businesses are a solid alternative to traditional loans with long amortizations - Poor credit history/credit score of owners can derail this type of funding -

These loans are lump sum loans typically repaid from sales or credit card sales over a 12-24 month period while covering business expenses - Small loans in the 25-150k range are typical under the merchant cash advance. These future ' sales-based loans ' evolved from retail merchant funding around credit card and debit card sales and are popular and accessible online. They provide a quick injection of funds for a percentage of future daily sales. A minimum personal credit score of the business owner is required.

 

Business Credit Card -  credit card financing is a convenient short-term solution to finance small business expenses under a revolving credit concept with predetermined credit limits, along with offering various awards

 

ALTERNATIVE FINANCING FOR SMALL BUSINESSES

 

Big Canadian banks approve only a portion of loans for small businesses, so it is prudent for business owners to explore financing solutions and funding alternatives.

Alternative lenders approved a large share of SMB loan applications. Alternative fintech lenders grew despite dwindling customer interest in traditional banking.
 

It should always be remembered that higher interest rates on alternative funding solutions are always more costly but provide access to capital.

 

Funding for startups can often be accessed through the Government Of Canada Small Business Loan program. Industry Canada delivers and sponsors. This solid program which is somewhat similar to a traditional bank loan. This program was modelled around the Small Business Administration ' SBA ' loan. Excellent credit, i.e. typically, a credit score of 650 is required by the

 

Interest rates/interest payments under the program are very competitive. Many entrepreneurs use the program for startup funding in the early stages of their business idea /project. Talk to the  7 Park Avenue Financial team to determine whether your local bank or credit union participates in the government-guaranteed loan and how to identify potential ' bad credit ' issues.

 

Grants and Subsidies: 

 

Governments and some other organizations often provide grants and subsidy programs to support businesses in specific industries or promote innovation. These non-repayable funds can be a valuable source of financing, allowing companies to fuel their growth, develop new products, or engage in research and development. Canada's Sr&ed program is a popular government funding program, and sr&ed refunds can also be financed.

 

Let the  7 Park Avenue Financial team help you with a winning business plan that meets and exceeds the requirements of banks and other commercial lenders.

 

These solutions distinguish themselves for many business owners because they provide billions of dollars of capital for SME COMMERCIAL FINANCE needs in... are you ready???... A very short period!

 

It's all about quick access to cash as far as most firms are concerned. At least, that's what business folks tell us. They hate it when financing stifles their ability to 'seize the moment' regarding new sales opportunities.

 

THE PERSONAL GUARANTEE ISSUE FOR SMALL BUSINESSES 

While personal owner guarantees are required for traditional bank loans and in almost all Canadian business financing for private firms, there is less emphasis on these guarantees regarding various alternative finance solutions. But for the most part, it's all about 'timelines' and the ability to access cash.

 

 

BENEFITS OF ALTERNATIVE FINANCING  

 

Alternative financing options offer several benefits, including more flexible borrowing requirements and faster approval. Many companies that can't access the financing they need from traditional financial institutions have access to numerous funding options in the alternative lending landscape in Canada. While many forms of alternative funding have higher rates, they can provide the capital access a company needs to fund day to day operations and access growth opportunities.

 

 

CONCLUSION - SOLVING YOUR CASH FLOW & BUSINESS GROWTH  

 

Boosting your cash flow is essential to the success of your business. Whether you choose a traditional or alternative financing option, evaluating each option carefully and considering the pros and cons is necessary.

If you're unsure which financing option is right for your business, consider speaking with an experienced Canadian business financing such as 7 Park Avenue Financial.

Managing cash flow is crucial for the survival and success of any business. By exploring cash flow financing solutions and finance alternatives, companies can optimize their cash flow, overcome financial hurdles, and position themselves for long-term growth.

 

Canada's business owners have several ways to secure business financing.  There are plenty of different options in terms of financing. Therefore your research on this will help determine the best solution for you. The good news is you never need only a traditional bank to get the funding for your business. Venture capital, peer-to-peer marketplace lending, and a crowdfunding platform are out of reach for ' raising money ' credit options.  They probably are!

 

Even traditional business loans are often not attainable for many firms. Funding small businesses in Canada can often be challenging - If your company is looking for some cash flow 'fuel' from forms of finance that will help you grow and run your business and for more information, speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you in taking your business to the next level. Stop pretending that newer financing options for business aren't for you!

 

 

  

FAQ: FREQUENTLY ASKED QUESTIONS  

What is alternative lending?

Alternate lending describes loans that occur not within a conventional financial institution. Alternative loans are more flexible and often have a fast application turnaround. Alternative lenders often offer loans in smaller amounts than banks which often specify minimum loan terms that are too high for a small business.

 

Alternative lenders also offer unconventional lending options that enable businesses to leverage the assets like the account receivable or the sale of credit cards instead of borrowing on credit. Many types of alternative loans are available. Hence there will likely be an alternative loan out there that matches your situation, and many types of alternatives are available to banks and traditional lenders.

What are the benefits of alternative lending?

Every business needs working capital to flourish. With poor funding options, startup enterprises will likely be forced into a slowdown quickly. Avoiding traditional bank loan routes may seem impossible, but there is a whole range of small business financing options accessible for entrepreneurs. Understanding the most competitive financing options will increase a  company's longevity and chances of survival. Have the right analysis that helps you get the proper credit options to suit your business needs.

  

What exactly is cash flow business financing?

  

Cash flow business financing refers to various strategies and methods businesses use to manage and optimize their cash flow. It involves accessing funds to cover operational expenses, invest in growth opportunities, and ensure smooth day-to-day operations from the business bank account.

 

 Why is cash flow financing important for businesses? 

 

Cash flow financing is crucial for businesses because it helps ensure a steady inflow and outflow of funds. It allows businesses to meet their financial obligations, manage working capital, seize growth opportunities, and maintain a healthy financial position in the business's cash flow.

 

 What are some common finance alternatives to traditional bank loans for businesses? 

 

 Finance alternatives include invoice financing or factoring, non-bank business line of credit, merchant cash advances, crowdfunding, angel investors and venture capital, peer-to-peer lending, grants and subsidies, and bootstrapping. These alternatives provide businesses different avenues to secure funds based on their specific needs and circumstances.

 

 How can cash flow financing solutions help businesses in challenging times? 

 

Cash flow financing solutions versus a traditional business loan can provide businesses quick access to funds during challenging times, such as economic downturns or unexpected expenses. They offer flexibility, speed, and tailored approaches to address immediate cash flow needs, helping businesses weather financial uncertainties and maintain stability.

 

What factors should businesses consider when choosing between different finance alternatives?

 

Businesses should consider factors such as their specific funding requirements, repayment terms, interest rates or fees, eligibility criteria, long-term implications, and the alignment of the financing option with their growth plans. It's crucial to assess the pros and cons of each alternative and determine which option best fits their unique situation and goals.
 

 What are some Alternative options for financing?

Alternative financing options for small businesses include cash flow lending solutions such as peer-to-peer lending, business credit cards, crowdfunding, microloans, invoice financing, and merchant cash advances. These options are becoming increasingly popular, especially for businesses not qualifying for traditional financing.

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