Revolutionize Your Business Growth: Explore Canadian Business Loans and Debt Financing Options

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YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING!

Discover the Power of Business Loans and Debt Financing: A Game-Changer for Canadian Entrepreneurs

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

 

 

 

Maximize Your Business Potential: Unleashing the Benefits of Business Loans and Debt Financing in Canada 

 

 

Business loans in Canada come with certain rules around debt financing when done. Properly. Let's dig in.

 

 

INTRODUCTION:

 

 

For a company to be successful in running a business in Canada business financing is critical- Numerous  Canadian business debt financing options are available to help owners achieve growth goals, as well as manage cash and exploit new business opportunities.  We'll discuss those options as well as several government back programs as well as alternative lending options.

 

 TYPES OF BUSINESS LOANS IN CANADA

A:

1. Short-term loans are typically used to address day-to-day operational needs, such as working capital or cash flow management or to purchase inventory. These loans typically have terms of up to one year and may require weekly or monthly payments. Short-term working capital loans are readily accessible and available from numerous commercial lenders as well as online - The borrowing formula relates to the sales and credit history of the company and the credit score of the business owner. Typically these loans are more expensive.

2. Medium-term loans are often used for business investment and expansion, equipment and technology purchases, or refinancing existing debt. Repayment terms are one to five years, these loans provide more flexibility and often have lower interest rates than short-term loans which are much more expensive.

3. Long-term loans are ideal for financing large capital investments made in the business, as well they are suited for acquisitions. These loans can have repayment terms of five to twenty years and usually offer lower interest rates for businesses that qualify with the required amount of cash flow or collateral.

 

B. Lines of Credit

 

1. Revolving lines of credit allow a business to draw down funds for cash flow gaps  as needed, up to a predetermined credit limit. Businesses pay interest only on the outstanding balance based on the amount borrowed and drawn, and the credit line is replenished and revolves as the business repays the borrowed amount based on incoming receipts and cash inflows.

C. Asset-based Financing

1. Equipment financing or equipment loans are used for purchasing business assets. The equipment itself serves as collateral, reducing the lender's risk based on the collateral secured. Equipment leasing is used by over 80% of North American businesses in the purchase of assets.

2. Inventory financing provides businesses with the capital needed to purchase and replenish  The inventory itself serves as collateral, ensuring that the lender can recover their investment if the borrower defaults. Inventory financing is often combined with accounts receivable financing in a business line of credit solution.

 

Accounts Receivable Financing

 

1. Invoice factoring and invoice discounting allow businesses to sell outstanding unpaid invoices to a factoring company, which then advances a percentage of the invoice value. Under traditional factoring solutions, the factoring company assumes the responsibility of collecting the payments, while the business receives immediate cash.

2. Confidential receivable financing is similar to factoring, but the business retains control over collecting invoice payments. The lender advances a percentage of the invoice value, and the business repays the advance once the customer pays the invoice. With the company having responsibility for billing and collecting there is no notification to the client.

 

Mezzanine Financing  / Cash flow loans - Mezzanine finance is a hybrid of debt and equity financing, providing businesses with capital in exchange for a percentage of future profits or equity. This type of financing is ideal for businesses with strong growth potential but limited collateral - as well the company must demonstrate strong historical and present cash flow.

 

Commercial Mortgages -  Commercial real estate mortgages are used to finance the purchase of company-owned real estate, such as office buildings, retail spaces, or industrial properties.

 

 Merchant Cash Advances provide companies with a lump sum of capital in exchange for a percentage of their future sales. The merchant cash advance options are well-suited for retailers with high credit card transaction volume who wish to borrow money for short term needs /operating expenses.

 

  

HOW IS BUSINESS DEBT SECURED? THE PROS AND CONS AROUND COLLATERAL AND GUARANTEES  

 

For the most part, debt is ' secured ' - either by assets or cash flow, or both. For companies with solid, predictable cash flow, a company's promise to pay might be all that is required.  That is a rarer occasion. Debt financing is the alternative to equity financing. What types of debt financing work for your business?

 

By the way, ' unsecured' cash flow loans, also called ' Mezzanine,' almost always cost more, being the lender is ultimately unsecured, relying solely on the delivery of the cash flow promise - they are a hybrid form of debt financing. Different types of business loans vary based on whether they are traditional in nature or from the alternative lending landscape. ' Mezz' financing usually has a higher interest rate attached to the transaction and lenders want to see proven cash flows.

 

  

CANADIAN BANKS AND BUSINESS FINANCING  

 

Business owners will often consider bank loans from Canadian chartered banks as the optimal solution - certainly, it’s more often than not the ' go-to. ' However, not all business owners and financial managers understand the bank requirements around secured term lending. 

 

On the other hand, they also don't know there are alternatives. The small business owner should ensure they can demonstrate a good credit history and personal credit report profile - that is a requirement for different forms of financing.

 

  

HOW DO BANKS DETERMINE YOUR DEBT FINANCING CAPACITY   

 

From the bank's lending criteria perspective, POSITIVE CASH FLOW is a must for debt financing of any time. Formulas that have been in use forever for CASH FLOW COVERAGE and DEBT TO EQUITY are the key drivers in commercial debt financing. Bank debt is typically ' senior debt ' and is often has the bank in ' first position' over all other lenders.   Banks typically document this transaction under a loan agreement called a ' GSA ' - A general security agreement.

 

  

SOME FIRMS MAY HAVE A VARIETY OF LENDERS  

 

When we talk to clients about new debt financing options, one of the issues that always must be dealt with is relationships with other creditors. On occasion, this requires unwinding of agreements between lenders, requiring additional time to complete the financing required.

 

  

WHAT NEEDS DO BUSINESS LOANS ADDRESS? 

 

Business loans can finance various needs - these include:

Working capital,

Fixed and capital assets

Acquisitions

 

  

  

WHEN IS DEBT  ' TOO MUCH ' - THE DISADVANTAGES OF DEBT FINANCING    

 

The $64,000 question in debt financing is almost always how much debt can your business manage. Too much debt creates a highly leveraged company - Done right, it's great for ROI, done wrong... a recipe for business failure.

 

When accounting for debt on your balance sheet, term loans will always be broken down into current and long-term. The current is the total of the loan that will become due in the next year. On the other hand, revolving credit facilities simply... revolve... and are based on levels of inventory or accounts receivable, or both.

 

  

 THE DOWNSIDE OF DEBT FINANCE   

 

Debt is, of course, the alternative to equity - in a low-rate environment, the capital cost is low, and payback can more easily be justified - however, rates have started to increase substantially. The negatives relate to what we have already talked about:

 

Taking on too much debt

 

Potential business failure

 

Implications around personal guarantees

 

Payments are fixed - i.e. they must be made!

 

CONSIDER DEBT FINANCING VIA THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM FOR A TERM LOAN

 

Government-backed Loan Programs

 

A. Canada Small Business Financing Program (CSBFP) The' SBL LOAN '  provides loans to both new and small businesses for purchasing real estate, equipment, or financing working capital. The federal government guarantees a large portion of the loan, reducing the risk t financial institutions such as banks and credit unions who underwrite the program for the government. Thousands of small businesses utilized the program in Canada, allowing businesses to access capital at competitive rates where financing might otherwise not be available.

The Business Development Bank/ BDC  offers various financing solutions via term loans, commercial mortgages and equipment loans.

 

In  2022 significant changes were made to the Canada Small Business Financing program introduced major changes to the program with increased loan amounts and improved loan conditions - The maximum loan amount under the program was increased to 1.1 Million dollars and new financing classes around intangible assets, franchise fees, working capital and lines of credit were introduced.

 

A new financing product, the line of credit, was introduced for working capital costs, with a maximum term of five years. The maximum interest rate for lines of credit is prime + 5%, with a registration fee of 2% of the authorized amount and an annual administration fee of 1.25%. Other changes include provisions for the release of a guarantor, non-compliance, transfer of loans, and additional clarifications.

 

A good personal credit score from the borrower is required under this guaranteed loan program  - typically in the 650 range for a credit rating.

 

For the SME sector in Canada, the Government of Canada Small Business  Loan is a solid debt alternative that can be very attractive versus an unsecured bank loan and its various requirements. New businesses and start ups are particularly attracted to this loan. It's a bit similar to the SBA loans' offered in the U.S. under the Small business administration.  Why? It has attractive rates, repayment without penalty, and a lesser Personal Guarantee implication.

 

The advantages of debt financing always become more obvious when you have structured financing under flexible terms and conditions, as well as of course, the interest rate on your transaction. Business owners should make sure they understand various other benefits, such as the ability to pay back without penalty, etc. Interest payments can be calculated on a fixed or variable rate option for the monthly payment based on final loan approval.

 

Government SBL loans are for small business owners who want to achieve one of the best finance solutions for small business loans in Canada and are available from participating financial institutions such as banks and credit unions. Interest paid on debt financing is tax deductible for a business expense.  Two other crown corporations, Farm Credit and EDC provide financial support to the agriculture and export sector respectively.

 

At 7 Park Avenue Financial, we encourage business owners to separate personal assets from business expenses and needs, and a bad credit profile in your personal life will almost always affect SME borrowing success.

 

  

CONCLUSION - BUSINESS LOANS DEBT FINANCING 

Navigating the different types of business loans and debt finance solutions can be challenging for Canadian business borrower. Having the proper knowledge about what type of funding your business needs, as well as having the ability to compare loans is key to supporting business growth and long-term success.

 

Tired of wasting time searching for angel investors, VCs, family and friends, etc?!

 

For a proper explanation of the right type of business loans and business credit for small businesses, seek out and speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with your debt financing needs.

 

 

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

 

What is the eligibility and application process around business loans and debt financing?

To apply for a business loan, lenders consider factors like credit history, business plan, collateral, and debt service coverage ratio. Debt financing costs and fees include interest rates, origination fees, prepayment penalties, and late payment fees.

 

To select the right loan, businesses should assess their needs and objectives, compare loan terms and conditions, and evaluate lenders and their reputations around issues such as competitive interest rates. Unlike equity financing debt interest repayment flexibility should always be considered when you choose debt financing for business finances. A business loan calculator is a useful tool to calculate finance payments, etc

 

 

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

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

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YOU ARE LOOKING FOR CANADIAN BUSINESS FINANCING

Commercial Business Finance Loans for Working Capital

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

        Financing & Cash flow are the biggest issues facing businesses today

               Unaware / Dissatisfied with your financing options?

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

Email - sprokop@7parkavenuefinancial.com

 

 

 

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

 

 

INTRODUCTION

 

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

 

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

 

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

 

 

UNDERSTANDING WORKING CAPITAL LOAN SOLUTIONS 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

 

Revolutionize Your Business Operations with Working Capital Loans

 

 

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

 

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

 

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

 

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

 

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

 

 

THE PROS AND CONS OF WORKING CAPITAL FINANCING SOLUTIONS 

 

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

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

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

 

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

 

Other solutions you can consider are :

 

LEASE FINANCING

PURCHASE ORDER FINANCING

SR&ED TAX CREDIT FINANCING

SECURITIZATION

 

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

 

THE IMPORTANCE OF WORKING CAPITAL FINANCING SOLUTIONS

 

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

 

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

 

 

CONCLUSION 

 

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

 

 

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

 

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

 

When You Should Consider a Working Capital Loan 

 

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

 

 What are the types of Working Capital Loans?

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

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

 

 

What is working capital? 

 

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

 

  

How is working capital calculated?  

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

 What is working capital efficiency? 

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

 

  

What are the requirements for a BDC loan?  

 

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

 

 

 

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

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

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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.

 

 

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