Alternative Funding Options: How to Fund Your Business Without a Bank Loan

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YOUR COMPANY IS LOOKING FOR FUNDING OPTONS!

ALTERNATIVE SOURCES OF CAPITAL FOR YOUR BUSINESS

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

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

 

 

 

The New Era of Small Business Financing: A Comprehensive Look at Alternative Funding Options

 

Sources of financing in Canada can of course include alternative funding options that are typically non bank solutions.  What are some of these finance solutions, When do these make sense for your firm, what are the costs, and how do they work? Let's dig in.

 

INTRODUCTION:

 

As a business owner you want to be able to navigate the changing landscape of alternative business funding in Canada - Why ? Simply that it allows you to stay ahead of the game .

 

As your business evolves you need to meet changing financing needs - At 7 Park Avenue Financial, our goal is to ensure you understand the latest trends and financing strategies, allowing to you secure capital and growth financing!

 

Naturally, some types of financing have drawbacks  and we will demonstrate best practices and finance options in today's economy

 

 

WHAT IS ALTERNATIVE FINANCE?

 

Alternative finance refers to the different source of financing that allows a business to obtain business capital to start or grow business operations, outside of loans from  traditional banks loans of various equity financing sources. Examples of commonly used alternative funding include asset-based lending, factoring, sr&ed tax credit financing, government loans, etc.

These sources of capital allow a business to fund sales of products or services as well as expand business operations and improve cash flow.

 

 

WHY DOES A COMPANY NEED ALTERNATIVE FINANCING

 

A company can find itself in need of alternative financing for many reasons. Whatever the situation may have been the end results seem more often than not to always come back to issues revolving around sales, profits, and cash flows.

 

So at that point, it of course still needs to ‘pay its bills as well as hopefully grow. Small businesses have been known to search everywhere for funding, up to and including the proverbial ' friends and family, peer lending, angel investors and venture capital! Those venture capitalists can be a tough bunch when it comes to demanding equity in your business!

 

What then are some of the actual sources of alternative finance when a bank loan is not available and where do they come from? In some cases they might be obvious commercial financing vehicles; other times owners might not consider less obvious sources of financing which might include working with vendors/suppliers, landlords who are uniquely part of the cash flow and creditor/debtor relationship.

 

 

 

WHO PROVIDES  CANADIAN BUSINESS FINANCNG SOLUTIONS - KEY SOURCES OF ALTERNATIVE FINANCE 

 

We could call those internal type relationships and solutions, but when it comes to external solutions they are as follows:

 

Commercial financing companies

 

Insurance Companies

 

Specialized divisions of Canadian chartered banks

 

Government and Crown Corporation financing - Financial assistance via federal government loans under the Canada Small Business Financing Program

 

Asset based lenders   - ABL lenders compete with traditio

 

 

Equipment financing firms

 

Mezzanine lenders

 

 

 

  

FUNDING SOLUTIONS FOR YOUR COMPANY  

 

If your firm can work with any or a combination of these entities the following solutions are potentially available:

 

Receivable Financing - Receivables finance, also known as factoring is one of the most popular methods of obtaining funding based on the business asset of outstanding receivables - These are either financed or purchased, providing the business with immediate cash as it generates sales - This financing is popular because it eliminates long payment cycles take by clients which can lead to severe cash flow/working capital problems.

 

Government Small Business Loans

 

Working Capital term loans from Canada's Crown Corp Bank/BDC

 

Short Term Working Capital loans/ Merchant Cash Advance -

 

Working capital loans that are short-term in nature have become very popular as alternative funding sources - they are easily accessible and allow businesses to quickly obtain the capital they need - they are a good potential solution for businesses that don't have a lot of past credit history, as the formula for lending revolves around the future sales of the business and the owner's personal credit score, The downside of this type of financing is the relatively high cost/high-interest rate, which can lead to repayment challenges in this type of debt funding under this financing business model.

 

Inventory financing

 

Tax Credit Monetization (primarily SR&ED Bridge loan Financing)

 

Asset based non bank business lines of credit (Typically called ' ABL Financing')

 

Unsecured cash flow/mezzanine loans

 

Lease Financing -

 

Lease financing allows companies to lease new or used equipment and other assets and technology that are needed to run the business - equipment financing solutions allow a business to conserve capital and preserve existing credit facilities while having access to financing to acquire assets needed to run and grow the business.

 

In order to access these types of financing your firm must be in a position to demonstrate it has some long-term viability despite whatever your recent circumstances might be. The ability to show some strong management expertise and to address why your own particular industry is viable is also key. Interest rates will vary with the type of financing and lender you access so owners may want to ensure they understand the risks and benefits of any financing they undertake.

 

  

SPECIAL LOANS / TURNAROUND FINANCING   

 

In certain cases, we've met with clients who have been asked by their bank to terminate the bank/client lending relationship. Typically the client is now in a specialized category called ' SPECIAL LOANS ' and banks typically provide some form of reasonable notice that new financing sources will be required for your company.

 

We feel business owners are somewhat naive in thinking that they can replace one Canadian chartered bank with another when their firm is in some sort of financial distress or challenging situation. 

 

We would point out that in today’s more conservative commercial lending environment it’s difficult to replace financing for a fairly healthy company, let alone one that is experiencing challenges when it comes to options for small businesses.

 

  

 KEY TAKEAWAYS   

 

Alternative finance options are becoming increasingly popular with SMB companies in Canada

 

Traditional bank financing continues to be difficult to access based on the eligibility criteria of Canadian banks

 

Business owners and financial managers must evaluate and consider the pros and cons of every type of financing, along with costs and eligibility criteria

 

Alternative funding options are more quickly accessible and help businesses with cash flow needs around growth and day-to-day operations

 

  

CONCLUSION  

 

Canadian business owners continue to face unique financing challenges in obtaining the capital they need. The lending standards of banks who lend money to businesses  have tightened significantly - which becomes a challenge for a business to obtain the financing it needs from traditional financial institutions

 

Alternative funding options help a business access capital and the ability to run a business and grow operations.

 

If you are looking at options that will ' stand up ' for your company in areas of financing investigate those options - Talk to  7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with alternative funding options that make sense and allowing your company to achieve the high growth potential you are aiming for.

 

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

 

What are some common types of alternative funding options for businesses?

 

Some common types of alternative funding options for A business include , as well as the business owners' own money, equity-type financings such as crowdfunding, peer-to-peer lending, venture capital, angel investors, and business incubators. These are more expensive than business loans via debt financing solutions for more established businesses.

 

  

How do venture capitalists and angel investors differ as sources of funding for businesses?  

Venture capitalists focus on investing in high-growth startups, many of whom are technology-type businesses with the potential for large returns on investment - Angel investors tend to invest in early-stage companies and are often in a mentor relationship with the company.  Both venture capitalists and angel investors will demand some level of control and equity in the business. This type of financing is not suited to small business owners who prefer alternative financing options around monetizing sales and assets for the cash flow a business needs via more traditional loans.

 

 What are some alternative sources of financing for businesses beyond traditional bank loans?

In addition to the funding solutions provided by a bank business loan, companies can access alternative finance sources from asset-based lenders, equipment lessors, providers of working capital loans via merchant cash advances, and receivable financing/invoice factoring companies. Many technology-based firms can access Saas Financing and SR&ED tax credit financing. Alternative funding options should be viewed in the context of advantages to the business and the cost of financing.

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

Asset Based Lending For Businesses In Canada

 

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YOU’RE  LOOKING FOR  ASSET BASED LENDING SOLUTIONS!

A FLEXIBLE FINANCING OPTION - THE BENEFITS OF ASSET BASED LENDING

 

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

 

 

 

 

WHAT  YOU NEED TO KNOW  ABOUT ASSET-BASED FINANCING IN CANADA - INTRODUCTION TO THE LOAN BASED ON ASSETS

 

 

 

What if you need to finance your company’s growth? Are there only traditional methods of financing available?  Asset-based lending is the new alternative for working capital in  Canadian Business Financing!

 

 

INTRODUCTION  - THE WORKING CAPITAL FINANCING SOLUTION YOU'RE LOOKING  FOR - ASSET-BASED LENDING IN CANADA!

 

 

WHAT IS ASSET-BASED LENDING?  

 

Sometimes the traditional methods of business funding don't work for all firms -  one option remains asset-based lending! Transactions are structured as either business revolving credit lines or in some cases term loans on specific assets.

 

Asset-based lending is a  type of business financing allowing companies to secure financing using business asses as collateral - We will focus here on how your business can qualify, how the lending process works and how companies benefit from Asset-based lending, aka ' ABL '.

 

ABL financing uses sales and business assets as collateral to secure financing. The most common forms of collateral are the accounts receivable generated from sales, as well as inventories, fixed assets, and even commercial real estate if owned by the company qualifies.

 

A quick explanation of how commercial ABL lending works will help make sense of choices in whether or not they're the right fit -  The idea behind asset-based loans is simple -  The asset lender your business assets as security instead of relying solely on business credit history and cash flow and profits  - those latter  3  being the cornerstones of Canadian banks and commercial bank financing.

 

 

  

THE KEY BENEFIT OF ASSET BASED FINANCE

   

 

Asset-based loans provide a business with the working capital and cash flow needs while retaining ownership and use of the assets. These assets in turn generate business revenues, giving the company the flexibility that traditional lending from financial institutions such as banks can't provide when a company can't meet bank credit criteria.

 

Borrowing directly against your company's assets such as accounts receivable or inventory and physical assets / fixed assets/equipment and real estate, all in one facility is  the  'ABL ' solution -  Companies experiencing rapid growth and new growth opportunities  are solid candidates for asset finance

 

 

 

 

 HOW DOES ASSET BASED LENDING WORK IN CANADA  

 

In a nutshell, asset-based lending is a form of cash flow financing and monetization of your business assets. The asset lender allows you to secure loans based on the value of your business assets and can be ideal for businesses unable to access all of the Canadian bank financings they need. In many cases, these loans can be used to purchase a business.

 

Typical percentages of  funding are 90% of your  accounts  receivable and pre-agreed percentages on inventory, equipment, and  commercial real estate - These percentages  are typically always  high leverage and have higher advances than bank loans or bank business lines of credit

 

Business owners applying for asset-based loan solutions should have a strong understanding of the business assets on the balance sheet and their values. In certain cases on the larger transactions, an appraisal of key assets might benefit both borrower and lender . The ability to provide proper financials and related documents on the business is key.

 

Businesses will always benefit from the value of proper sales and financial projections that will demonstrate repayment ability - A  proper business plan will always be beneficial - 7 Park Avenue Financial prepares business plans for clients that meet and exceed bank and commercial lender / asset-based lender requirements.

 

  

REAL ESTATE ASSET BASED LENDING

 

Asset based lending for real estate is also available and is often structured as a term loan. An asset-based lending mortgage is often structured as a short-term bridge loan. Many businesses will benefit from ABL short-term bridge loans for real estate used as collateral.

 

 

  

 FINANCING YOUR BALANCE  SHEET ASSETS    

 

Asset-based loans are not your average loan. In fact, they examine the value of your tangible assets and use those assets as collateral - using them in case there is any chance that there could be a risk for default! 

 

With asset-based financing solutions via  7 Park Avenue Financial  entrepreneurs have another option  to fund their growth and  business capital needs -  When it comes to asset based loan rates Costs  are  reasonable  and commensurate with your overall credit quality and long-term prospects

 

Business owners should always consider if traditional bank financing is a better option than funding the balance sheet via an ABL loan . For businesses that qualify for bank financing bank lines of credit and other working capital solutions offered by traditional financial institutions might be sometimes more appropriate - if the business qualifies for bank credit approval.

 

Businesses that might not necessarily require a full asset-based credit line should consider factoring receivables as a full working capital solution for cash flow needs.

 

 FINANCING BUSINESS GROWTH  WITH FLEXIBLE ASSET BASED LENDING 

 

ABL lenders provide a super flexible solution that can be tailored to your individual needs. Asset-based finance is an exciting new trend in the Canadian finance world  - Asset-based lending banks and commercial finance companies offer businesses with unique needs and situations a chance to get funding that would otherwise be denied in traditional banking financial institutions for solutions such as revolving lines of credit.

 

 NO OWNERSHIP EQUITY DILUTION 

 

Asset lenders are a great option for entrepreneurs because they offer the benefit of not having to access additional equity financing.

 

Asset-based lending offers a huge advantage to business owners in today’s economy, with the ability to monetize your assets for an ongoing line of credit and cash flow needs.  With normal loans based on traditional financial metrics like profit margins or revenue growth rates, the asset-based finance solution offers access to business capital not available from traditional financial institutions.

 

 MAXIMIZING  LIQUIDITY  

 

One thing that makes asset-based lending great is being able to monetize your assets on an ongoing basis as your company grows and assets fluctuate based on sales levels and capital acquisitions.

 

This can be really important during challenging economic times like these where you may need cash but can't access a traditional loan in timeframes that make sense for your business needs.

 

 THE ASSET-BASED LOAN DIFFERENCE - LITTLE OR NO COVENANTS & GREATER CREDIT AVAILABILITY WHEN QUALIFYING FOR ABL FINANCE 

 

Qualifying for asset-based lending solutions requires that a company must meet specific basic criteria - the key criteria, of course, being having enough sales and collateral to secure the financing. Asset-based lenders will also look at the overall credit history of the company, as well as the company's ability to prepare ongoing financial statements and aged listings of key assets such as accounts receivables and inventory -

 

ABL lenders typically do a higher level of due diligence as the financing they provide does not rely on the financial covenants and ratios that banks focus on. They want to be sure the company can regularly report on progress and asset values.

 

Repayment of asset-based lines of credit is made on a revolving basis as the company receives cash inflows from collections .

 

The fear of not meeting loan terms due to uncertain visibility into the future is a scary situation, especially during these economic times. Asset-based loans have few covenants but often come with higher interest rates. Interest rates on asset-type loans are generally higher than rates on unsecured loans from banks.

 

 

  

CAN YOUR BUSINESS BENEFIT FROM ASSET BASED LENDING?  

 

Every industry in Canada qualifies for and can benefit from ABL lending - If a business has sales, assets, and growing receivables and inventory companies in sectors such as manufacturing, distribution, retail and transportation can benefit.

 

  

CONCLUSION - ASSET-BASED LENDING IS THE COMMERCIAL BANKING ALTERNATIVE  

ABL products are a great option for businesses in need of funds. The collateral required with these loans is the assets you already own! ,  as well as the future sales you generate - that makes for a  more flexible and customized solution when compared to traditional lines of credit.

 

Businesses considering asset based lending should focus on key requirements and processes in the asset-based loan solution. Any business having sales and assets that can't qualify for traditional lending can benefit from asset finance solutions.

 

The ability to pass proper due diligence as well as reporting capabilities are key to ABL success  - providing a valuable tool for accessing working capital and a finance structure suited to your business needs.

 

So, what is ABL?  Will it work for your company?  If you're looking for flexible financing solutions talk to  7 Park Avenue Financial, a trusted, credible, and experienced Canadian Business Financing advisor with a strong reputation who can assist you in your growth financing needs. Our team will ensure you are aware of all your financing options and ensure you will qualify for the maximum financing at competitive interest rates.

 

 

FAQ: FREQUENTLY ASKED QUESTIONS

 

What is the cost of asset-based lending?

Asset-based lending will commonly have a higher interest rate and financing cost so businesses should consider the costs associated with asset-based lending versus other options available.

 

What are  forms of asset based lending

Asset-based lending is a type of financing backed by the assets of the business. The most common assets used to secure asset finance lines of credit or term loans include accounts receivable, inventory, and property plant & equipment.

 

What is an asset based lending approach to financing?

 

The business of asset based lending is all about sales growth and pledged asset collateral. Collateral is an important part of any asset-based lending agreement. Lenders will make loans backed by physical assets and other collateral of the company - this is different from an unsecured loan via a covenants-based bank solution.

 

 How does a business qualify for asset based lending? 

ABL loans are based on business assets that meet certain requirements around the ability of asset-based lenders to convert assets into cash. Liquidation values are placed on different assets - for example, receivables are typically financed at 90% of their face value.

Sr&ed Loan And Sr&ed Funding At The Speed of Light !

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YOUR COMPANY IS LOOKING FOR CANADIAN SR&ED FUNDING!

Power Up Your R&D Projects: How SR&ED Loans and Funding Fuel Canadian Innovation

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

 

Discover the Secret to Non-Dilutive Financing: SR&ED Loans and Funding for Canadian Innovators

 

An SRED funding loan has been a key advantage of business owners & financial managers who take advantage of Canada's SR&ED program. As our good friends at BDC say its  ' financing r&d without breaking the bank !

 

 

 

INTRODUCTION

 

Canada's Scientific Research and Experimental Development (SR&ED) tax credit financing has proved to be a critical tool for Canadian businesses looking for assistance in their r&d activities - By enabling companies to finance their refundable tax credits in advance of filing their claim the Sr&ed Finance solution provides cash flow when companies need it most in their growth and innovation strategies. 

Let's dig in on maximizing sr&ed benefits via the financing of sr&ed claims in Canada and your sr ed eligibility.

 

WHAT IS SR&ED TAX CREDIT FINANCING?

 

 
 

Sr&ed tax credit financing allows your business to access capital via a short-term cash flow loan using your refundable tax credits as the only collateral for the loan. Although some companies choose to explore grant financing for r&d activity the actual SR&ED program is the government initiative that helps a business invest in research and development, encouraging innovation in Canada.

 

The prompt receipt of your R&D capital tax credit is quite often a key part of your overall cash flow strategy. While it’s not quite the ‘speed of light' it’s still quicker than almost all other loans in the business.  We're covering some key SR&ED financing basics - let's dig in.

 

 

PREPARING YOUR CLAIM - THE ROLE OF YOUR SRED CONSULTANT 

 

The true power of the SR&ED PROGRAM comes when you accelerate your claim and turn it into immediate cash.  Most of our clients, as sophisticated as they might be in their SRED filings actually also haven't heard that in certain cases your SRED can be considered for financing. 

 

In fact, the majority of claims are prepared by third parties called ' SR&ED Consultants' who in many cases focus only on claim prep, not financing the claim.

While a business does not have to work with a third-party independent sr&ed consultant the majority of businesses in Canada filing sred claims do in fact work and benefit from using these consultants. They help ensure a successful claim and filing and provide a nice level of assurance for the financing of your claim around the eligible expenses you have claimed. Many consultants specialize within certain industries, which is a further benefit in maximizing more of a refund.

 

Most sr&ed consultants work on a contingency basis, which is an additional appeal to the business owner.

  

THE SR&ED FINANCING PROCESS  

 

 

Accessing your sr&ed loan promptly has never been easier -  A simple business finance application with details about your sr&ed claim will generate a loan agreement term sheet. Most funds are distributed within a 2-week period and any claim greater than 100k can be quickly financed - Small claims can be considered under certain conditions. Talk to the 7 Park Avenue Financial team about how you can achieve the lowest cost financing in Canada around financing your refundable tax credits.

And by the way, no personal guarantees are required!

 

The program is by far the best program in Canada that incorporates a non-repayable grant for your firm's R&D work.  Many clients hear about 'government grants and loans' and ultimately realize these are not as available as one would think - however SRED is everything you hoped for... and more.

 

Even more important is that claims can also be financed PRIOR to filing - That whole process is called SR&ED accrual financing.

 

 5 THINGS YOU NEED TO KNOW ABOUT SRED FUNDING! 

 

What then are your 'must-knows' when it comes to SRED funding?

 

 

1. SRED is highly specialized - seek and work with a trusted, credible an experienced consultant to prepare your claim, as well as a credible business financing advisor to fund your claim immediately.

 

2. The only thing you need to know about financing a claim is that you must have a claim! It is a simple business financing application with supporting backup on your SR&ED - your actual refund is the key collateral in the claim.

 

3. SREDs are financed at 75% of your total claim value - No payments are made during the duration of the short-term sred loan

 

4. You can finance a claim as soon as it is filed; starting earlier simply accelerates the process. And remember, you can opt to finance prior to filing under accrual filing. It is kind of like an SRED line of credit.

 

5. We refer to an SRED ' loan ' - the reality is that no additional debt is added to your balance sheet because the loan is offset by the asset, the claim itself! You are simply monetizing, or ' cash flowing ' your claim.

 

As you can see by now the whole process of SR&ED Finance is simply the financing or 'factoring' of your claim. You are selling your right in the receivable now in lieu of cash that you will receive from the government many months from now, in some cases close to a year.

 

A QUICK RECAP / PRIMER ON THE SR&ED LOAN

 

5 key basics. As we noted SR&ED funding is specialized. Work with an expert for two reasons - maximizing the value and finance rate on your transaction, as well as ensuring the whole process goes smoothly.  You should not view the SRED loan process any differently than you would any other financing, you apply, you provide supporting backup, and you receive your funds after the normal sort of due diligence. The collateral, if we can call it that, is the SR&ED claim itself.

 

With respect to # 2 simply focus on the fact that you should consider financing the claim if it will generate a reasonable amount of working capital and cash flow that you need today. To be honest, most claims that are financed are in the 100k ++ range, but smaller claims can be effectively financed

 

Point #3 had us referring to loan to value - you can expect to receive an immediate advance on approximately 75% of your claim - that is the combo of the federal and provincial components. The balance is a holdback - it’s still your money, but final financing costs, plus any adjustments the government makes to your claim are accounted for in that 30% buffer that is held back by the lender.

 

"When can we obtain our funds?" is really the meaning of our 4th point. The entire process takes approximately 2-3 weeks as it covers your application, review of your SRED, normal financial due diligence, and the clarification of any issues raised by your firm or the SRED finance firm.  And the good news here is that again the term 'SRED funding loan' is a misnomer - you don't make any payments, and finance charges simply accrue and are deducted from the final accounting of the claim. That covers our 5th point of course.

 

 HOW CAN MY BUSINESS MAXIMIZE SR&ED FINANCING / FUNDING 

 

A business has a number of opportunities to maximize SR ED Financing

 

Companies  have tremendous flexibility in choosing how much of their claim they wish to finance and  when disbursements  are made

 

If a business has other tax credits these can be combined into the sr&ed loan

 

Sr&ed loans are an effective cash management  tool around utilizing sr&ed refunds when cash is needed to further r&d as well as helping to fund day-to-day operations and long-term growth and valuation objectives

 

 

KEY TAKEAWAYS ON THE BENEFITS OF SR&ED FINANCING

Numerous benefits around sr&ed funding for refundable tax credits include:

Quick access to cash - eliminating  the sr&ed CRA waiting process around your claim and refund

Sr&ed loans are a form of short-term debt financing that is non-dilutive to owner equity - businesses retain ownership  and control of the business

Sred loans are flexible - as well as no monthly required payments during the duration of the loan financing is competitive when it comes to rates compared to high-cost short-term working capital loans/merchant cash advances, or permanent working capital loans with long amortizations

 

 

 

CONCLUSION - SR&ED Financing Revolution: Transforming Canada's Research and Development Landscape

 

 

Bottom line - if you're a user of the SR&ED program consider SRED funding to solve that challenge of cash flow/working capital tied up in your R&D capital investments.

 

The financing of sr&ed tax credits has become one of the most valuable resources for firms committed to r&e - The combo of quick funding, good interest rates, and flexible repayment options allows businesses performing research and development to maintain a lead in today's competitive domestic, and yes, global economy!

 

A company's ability to understand how easy the sr&ed finance process is, combined with a quality claim with the help of a sr&ed consultant helps ensure the long-term economic and financial success of the business.

 

Talk to  7 Park Avenue Financial about sr&ed financing services with the lowest financing cost in Canada with a total focus on a quick and smooth application process via a trusted credible and experienced Canadian business financing advisor for funding solutions.

 

 

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

 

What is SR&ED funding?

 

The Canadian SR&ED (Scientific Research and Experimental Development) funding program is a Canadian government investment tax credit incentive program designed to help and encourage Canadian businesses to invest in r&d activities.

By providing cash refunds against refundable tax credits eligible companies receive assistance for their expenditures on eligible R&D SR&ED funding loans can significantly reduce a company's research and development costs and provide financial support for further innovation in a competitive economy in domestic / global markets.

 

 What is an SR&ED loan? 

 

SR&ED loans are a financing option that allows businesses performing r&d to access their future SR&ED refundable tax credit receivables in advance of the Canada Revenue Agency refund. This allows companies to fund working capital needs based on qualified sr&ed tax credits from CRA - By eliminating the waiting process for refunds the company receives cash based on the collateral provided on the tax credit refund.

 

  

How does the SR&ED program work?  

 

Canada's  SR&ED program provides cash refunds for tax credits to eligible businesses for their qualified research and development expenses, Companies must ensure their r&d projects involve work in 3 areas-

Technical advancement / technical uncertainty, and technical content. Companies file their claims annually based on eligible criteria as defined by CRA. When claims are reviewed and approved tax refunds are issued to the business based on this tax incentive program.

 

Who can claim SR&ED credits?

SR&ED credits are claimed by Canadian incorporated companies / Canadian controlled private corporations,  as well as proprietorships, and partnerships that carry out eligible r&d activities in Canada. The eligibility of a company for sr ed tax incentives focuses on the nature of the research and development as well as challenges encountered in the area of technical advancements. Canadian companies and businesses of any size can claim sr&ed eligible expenditures, and every industry is eligible to claim sr ed refund credits for r&d projects provided they meet program requirements under scientific or technological uncertainty.

 

 

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

Business Funding Expert Tactics For Your Company

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

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

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

        Financing & Cash flow are the  biggest issues facing businesses today 

               Unaware / Dissatisfied with your financing options?

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

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INTRODUCTION 

 

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

 

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


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

 

 

 

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

 

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

 

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

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

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

 

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

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

 

  

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

 

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

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

 

 

WHAT IS THE RIGHT FINANCING STRATEGY FOR YOUR BUSINESS?

 

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


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

 

 

WHAT ARE THE KEY PARTS OF A BUSINESS FINANCE APPLICATION

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

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

 

THESE BUSINESS FINANCING SOLUTIONS ARE AVAILABLE TO YOUR BUSINESS

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

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

Chartered bank lines of credit

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

A/R Financing - aka ' factoring and invoice discounting

Inventory Financing

Tax Credit Finance

Equipment Finance and sale-leaseback strategies

Commercial mortgages

 

  

KEY TAKEAWAYS: BUSINESS FINANCING  

 

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

Government Loans and Grants are available for small and new businesses

Specialized financing is available based on the business model and industry

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

 

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

 

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

 

 

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

 

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

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

 

 FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

 

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

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

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

 

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

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

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

 

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

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

 

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

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

 

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

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

 

 

Thinking Outside the Bank: Here's 7 Alternative Financing Options for Your Business

 

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YOUR COMPANY IS LOOKING FOR FINANCING ALTERNATIVES!

Alternative Financing for Canadian Businesses: Exploring  Unique Options for Business Funding

WHAT TYPES OF FINANCING DO YOU NEED?

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
 

Innovative Financing Options for  Canadian Business Owners: 7 Alternatives to Traditional Bank Loans

 

                                                           

Business finance alternatives actually depend on one key thing. Know what that is? It comes down to knowing where your company is at regarding its stage of growth. That's a long spectrum as financing alternatives start way back to business start-ups, established small businesses and all the way to mature businesses that have stopped growing and might be generating all the cash they need and even exploring venture capital as an exit strategy.

 

The business owner/entrepreneur in Canada knows very well the challenge of raising capital - while a bank loan via Canadian banks is the ' go to ' option that is always top of mind, bank financing is not always available for businesses - There are alternative financing methods that will in many cases be a better fit to your business needs.

 

 

WHAT IS ALTERNATIVE  BUSINESS FINANCING? 

 

Alternative financing is any type of business financing outside of traditional financial options via banks and other commercial lending financing institutions. Businesses should be aware of their options when financing cannot be achieved based on issues such as lack of business credit history, lack of assets, cash flow challenges

 

Alternative finance solutions appeal to business owners as interest rates are becoming more competitive in the alternative lending landscape and credit approval is quick and easy to achieve versus bank timelines for approval

 

 

  

SOLVING THE SME / SMB BUSINESS CAPITAL CHALLENGE

  

 

The business owner's key challenge is not to give up an ownership stake while at the same time achieving the business capital funding the owner/manager needs to run and grow the business.

 

MANAGING FINANCIAL STRESS IN THE BUSINESS

In some cases, the company and business owner might be challenged and undergo financial stress concerning debt load, lack of cash flow, etc. That's why it's important to know your financing option/options while understanding where your firm's journey to business financial health stands. 

 

 

WHAT ARE YOUR ALTERNATIVES IN BUSINESS FINANCE 

Bottom line - there are business financing alternatives!  Many firms find themselves in a position that yields a double-edged sword - they are growing too fast, and business feels good, but... they are constantly out of cash.  One of the most common solutions to that problem is asset-based lending, which typically means considering the move to non-bank asset-based lending solutions versus bank loans - And there are several of them -

 

7  TYPES OF ALTERNATIVE FINANCING FOR SMALL BUSINESSES & THE SME SECTOR IN CANADA

 

They include:

Non-bank business lines of credit

Basic A/R or Inventory Finance / Invoice factoring / Invoice financing ( As a funding option, the financing of outstanding invoices is currently the most popular method of short-term finance for financing small businesses in Canada )

Purchase Order Funding

Tax Credit Finance

Sale-Leaseback

Short-term unsecured working capital loans / Merchant Cash Advance / Business credit card for small business expenses - Short-term loans are popular because they provide quick access to capital with a streamlined approval process and funding availability within a matter of days - Formulas for approval around these types of loans are based on sales revenues and owner personal credit history - One caveat on these loans is the higher interest rates compared to a bank loan

Term Loans (Cash Flow-Based)
 

As you can see, there is a lot of flexibility in mixing and matching alternative financing solutions.

 

 

GOVERNMENT LOANS AND BUSINESS GRANTS  

 

Government-guaranteed loans are available for Canadian business owners and entrepreneurs, the Canada Small Business Financing Program is the most popular government-funded program in Canada, along with the SR&ED Program. These two programs provide billions of dollars of financing for business owners annually for startups and established businesses.

 

Talk to the 7 Park Avenue Financial team about how we can streamline your approval for Government Small business loan financing, as well as financing sr&ed tax credits.

 

Government grants are also popular because they do not require repayment but grants are difficult to access and can be time-consuming relative to the application process.

 

 

TURN TO THE 7 PARK AVENUE FINANCIAL TEAM FOR SOLID BUSINESS FINANCE ADVICE

 

Naturally, many business owners and financial managers face a conundrum that is even more simple - they don't know where to go or who to talk to for assistance in evaluation financing solutions. They are busy running their company and aren't dialoguing with lenders at either banks or commercial finance companies!

 

Remember also that when it comes to traditional financing, the credit scores and owner's personal poor credit history of small business owners are often key discussion points and will affect final interest rates.

 

 

  

WHAT ARE THE REQUIREMENTS FOR BUSINESS LOANS IN CANADA   

 

Many types of finance require and certainly are helped by a business plan. 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders in Canada. The type of business funding you need will always dictate the requirements and guidelines for applying, and you may want to ensure you understand the qualification requirements for the type of funding you need. Small business loans for startups require a more in-depth loan package.

 

 

  

  

HOW IMPORTANT IS EXPERT ADVICE FOR THE FUTURE OF YOUR BUSINESS    

 

That's, of course, the reason why companies can benefit from a business financing advisor - they are guaranteed to understand the full spectrum of alternative business funding. Suddenly they can see answers to challenges such as taking on major new contracts or offering clients extended payment terms.

 

  

MANAGING A TURNAROUND  

A company experiencing severe financial stress can also utilize a business advisor to see the way out via a restructuring and refinancing process. It would help if you made sure any plan to restructure can be properly implemented based on current lenders, supplier needs, and a careful review of finance options.

 

  

THE STARTUP CHALLENGE   

Businesses that are start-up in nature or generate their first revenues can benefit from non-traditional funding sources. Solutions that aren't business startup grants,  such as Government Guaranteed Small Business Loans, Equipment Financing as an alternative to loans,  etc., are tried and true solutions for startups.  These are some of the top startup options for financing small businesses in Canada.

 

 PERSONAL GUARANTEES, ETC! 

 

A good credit score and personal credit history of owner/owners is a large part of Canada's small business financing. A repayment schedule tailored to your needs is typically based on a 2-5 year term loan structure. Small business loan requests can be a daunting task for many business folks, so let the 7 Park Avenue Financial team help you when you need it most. On occasion dealing with a traditional bank or dialoguing with finance companies is not for the faint of heart. You want your best interests and needs respected when it comes to not paying a higher interest rate or providing outside collateral, etc.  

 

  

ARE YOU LOOKING FOR A BUSINESS FINANCING EXPERT? NOT GOING THE VENTURE CAPITALISTS ROUTE/FRIENDS AND FAMILY /ANGEL INVESTOR / CROWDFUNDING PLATFORM / P2P LENDING ROUTE ?!!  

  

 

Some businesses turn to venture capitalists and angel investors/ private equity investors, etc to fund their businesses,  In return for this type of funding for your business the business owners must be prepared to give up substantial ownership equity in the business and a strong growth plan must be in place - The equity investor, unlike a debt finance solution, will also look for an exit strategy of some sort.

 

While venture capital is abundant and no interest rates or no required repayment are attractive the business owner must be prepared to give up substantial control of the business - The business must ensure that is can scale quickly to achieve the returns required by equity investors.

 

 

 

CONCLUSION - ALTERNATIVE SOURCES FOR FUNDING BUSINESS GROWTH

 

There are numerous reasons why your business might want to consider alternative financing sources versus traditional financial institutions.

For real-world funding solutions, speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your business funding needs. Let our team help solve your cash flow problems with finance business decisions for financing a business that makes sense for your firm and industry.

 

   

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION  

 

 

What are some options for financing a business? 

Options for  financing a business include:

Self Financial via the own money of the business owner/ entrepreneur

Friends and family loans

Crowdfunding/Angel investor's equity partners

Government Small Business Loans / Government grants

 

       

 

How do you fund a business expansion?        

Business expansion can be funded via:

Business loan debt financing

Government business loans

Equity partners

Self-funding via owner equity or the cash flows of the business

 

  

What is the most common form of financing a business?

The most common form of financing  a business is debt financing via banks or other commercial lenders - The alternative to debt financing is equity financing via the sale of shares in the business - Debt financing is the cheapest form of business capital and allows owners to retain control and ownership of business operations

 

 

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

Why Asset Based Lines Of Credit Are All You Need ! Asset Based Business Credit Is Your Go To Solution For Business Credit & Cash Flow

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YOUR COMPANY IS LOOKING FOR CANADIAN BUSINESS FINANCING! 

Asset-Based Line of Credit: A Flexible Alternative to Traditional Bank Financing

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

        Financing & Cash flow are the biggest issues facing businesses today 

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

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

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

Discover the Power of Asset-Based Lines of Credit: A Game-Changer for Business Financing 

 

Canadian business owners and financial managers place great importance on their ability to achieve and maintain operating lines of credit.

 

 

Asset-Based Lines of Credit: The Flexible Financing Solution Your Business Needs Now

 

Asset-based credit lines are part of the asset-based lending solution in Canada - they are a viable alternative to traditional bank lines of credit and allow companies to borrow under a revolving line of credit facility based on sales and assets. This business credit line financing method is flexible and accessible by most companies utilizing credit lines to fund day-to-day operations. If your business has sales and physical assets and you need cash flow, ABL financing is the solution.

 

UNDERSTANDING BANK FINANCING / BANK CREDIT LINES / UNSECURED LOANS

 

Traditionally in Canada, the bank line of credit is also called an 'operating loan' and structured as an unsecured loan. It is short-term in nature, it revolves day-to-day, and so many finance people also call the operating facility a ‘revolver’.

 

 

 

It is simply a financing facility under which the bank agrees, in advance, to lend a maximum amount of money - typically against receivables and inventory as the pledged asset/assets. 

 

 

In bank lines of credit, certain conditions have to be met by your firm, and you are generally paying interest only o the amount outstanding daily. Revolving lines of credit or operating lines work best when they go up and down. Typically customers that are always at the top of their credit line are candidates for other financings such as equity or cash flow term loans.

 

 

 

WHAT ARE THE OPTIMAL USES FOR ASSET-BASED CREDIT LINES? 

 

Many businesses are looking to refinance existing credit facilities, and asset-based loan solutions are often a more favourable and accessible option.

 

Businesses experiencing rapid growth can access the capital they need without violating existing financial covenants with existing lenders - allowing the company to expand on its business goals via liquid assets such as accounts receivables.

 

Some businesses that are focused on a turnaround or restructuring use the leverage of sales and assets  to stabilize the business, access cash flow, and manage the turnaround process on the route back to more traditional financing

 

Companies looking to acquire or buyout another competitor or business can access the capital in the target business to facilitate a business purchase/ business transfer of ownership.

 

 

Most Canadian business owners know that the bank focuses more on receivables than inventory. Because inventory cannot easily be converted into cash by a bank, (if it had to) you will typically get a much lower advance rate or margin rate on inventory.

 

 

ASSESSING THE NEED FOR A SOLID LINE OF CREDIT SOLUTION

 

 

So, what happens when this traditional type of financing doesn’t work for your firm? You will know it is not working when some or all of the following seem to occur:

 

 

- You are consistently maxed out on the operating line

 

- Collections are slow, which further exacerbates the line revolving to your and the bank's satisfaction

 

- You are worried that you do not consistently have enough cash flow and working capital to take on new orders or contracts.

 

 

Is there a solution? Absolutely - a new breed of a business line of credit financing is gradually taking hold in Canada - ABL, or asset-based lines of credit. The total focus of these facilities is to maximize the liquidity of your assets to a much greater extent - and when we say all assets, we mean inventory, receivables, equipment, potentially real estate, and new contracts and purchase orders. The facility is short-term in nature, not a term loan, so it does not include equipment or commercial real estate, which is financed under other conditions by asset based lenders via an asset based facility.

 

That’s true asset-based financing!

 

  

HOW DO ASSET-BASED LENDING SOLUTIONS INCREASE BORROWING POWER  

 

Typical advances on accounts receivable are in the 90% range, and common advance rates on inventories and fixed assets tend to be in the 50-75% range, respectfully. That is more available cash for your business, allowing proper funding of current debt obligations under a flexible credit facility structure with simple loan compliance requirements.

 

 

One of our customers had a $100,000.00 line of credit with a Canadian chartered bank that grew into a 2 Million dollar asset based financing arrangement.

 

 

WHAT ARE THE BENEFITS OF ASSET BASED FINANCING FOR YOUR BUSINESS?

 

Financing that is flexible and tailored and structured to your unique needs

Access to business capital based on sales and eligible assets as collateral for an ongoing borrowing based

No focus on historical cash flow / financial covenants

Encourages financing for high-growth firms

Allows the company to leverage business opportunities

 

 

The asset-based lending industry is robust in Europe and the U.S.  It is slowly gaining traction in Canada. Although one or two of the banks offer these facilities, most of this type of financing is independent of the banks.

 

  

CONCLUSION  

 

Business owners should recognize they have financing options for growth capital and the ability to overcome constant cash flow challenges. Alternatives to bank finance offer access to working capital for any growing or leveraged business and unable to meet traditional financial institution requirements.

 

 

Due to the somewhat early and fragmented nature of this financing in Canada, your firm is strongly encouraged to call  7 Park Avenue Financial,  the experience, advice, and credibility that comes with talking to a business advisor in this area of Canadian financing for comprehensive financial solutions for your business needs,

 

Asset based lines of credit - they are newer to Canada, they work, and you should investigate the possibilities to maximize your cash flow and working capital needs.

 

 

 FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION 

 

 WHY CHOOSE ASSET BASED LENDING OVER SECURED LOANS? 

 

Asset-based lending solutions will almost always provide access to more capital versus unsecured bank loans with lower margins on borrowing, the need for financial covenants and outside collateral, and a focus on personal guarantees.

Asset-based financing is flexible and tailored to business assets and sales

Secured loan financing is quicker to process for credit approval - Requirements are based on collateral versus overall creditworthiness.

Interest rates are competitive and sometimes, but not always, are lower than bank rates under certain conditions.

 

 

  

WHAT IS THE ASSET BASED LENDING DUE DILIGENCE PROCESS  

 

Asset-based lenders focus on evaluating financial assets, including reviews of financial statements and relevant business documents.

Assets financed must not be subject to any existing liens by other lenders or the government.

An industry review will typically be done around the company's business model.

 

 WHAT IS THE DIFFERENCE BETWEEN ASSET BASED LENDING AND FACTORING?  

 

Asset-based loans focus on collateral around receivables from sales and other specific business assets - factoring is the sale of the accounts receivable to a third-party finance firm.

Companies maintain ownership and control of assets in asset-based loan solutions - when receivables are sold in a factoring facility, the factoring company owns the receivable.

Asset-based lending solutions offer higher financing given that all business collateral is secured under a loan facility, while factoring is limited to accounts receivable sold b the company.

In factoring, no regular payments are required; as receivables are collected, a fee is taken by the factoring company to advance the funds at the time of sale of the receivable.

Both ABL and factoring offer short-term financing solutions for businesses - Differences arise around the cost of financing, the amount of achievable funding, and the ownership of assets financed. 

 

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