Get Your Business to the Next Level: Exploring Different Financing and Funding Options

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YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

From Commercial Loans to Government Funding: A Comprehensive Guide to Business 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?

CONTACT:

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

 

Innovative Business Loans and Funding Solutions to Drive Your Company Forward

 

Business financing needs, aka ' business loans'!  in Canada might be requiring you to ' test the water ‘. But the question that begs to be asked by small business owners  is :

"What amount of capital do you require for your company and, equally important, what is the desired or best funding solution".

 

INTRODUCTION

 

Business owners know that cash flow and the right financing solutions are the lifeblood of a business - from startups to established businesses any company that wants to both expand or generate additional cash flows for funding day-to-day operations - Numerous financing options, both traditional and alternative in nature are available for the business loans and funding you need to succeed.

 

Small and medium-sized companies rarely qualify for the venture capital sought by major tech firms, etc - they want ' main street' /'real world' lending solutions. Let's dig in!

 

 

 

COMMERCIAL LOANS FOR BUSINESSES 

 

Most commercial loans are for established businesses that have been in business for years - startup financing is always a challenge in Canada.  Whether it is a startup or a business already doing well financing can help grow and expand while maintaining efficient day-to-day operations.

A commercial loan can be secured or unsecured - secured loans are asset and collateral-based - assets financing includes accounts receivable, inventory, fixed assets and technology,  rolling stock, and real estate.

 

Unsecured loans tend to be cash flow based and can come in the form of unsecured bank lines of credit or cash flow mezzanine type financing solutions that focus on the quality of the cash flows of the business to meet debt obligations.

 

ELIGIBILITY REQUIREMENTS FOR COMMERCIAL BUSINESS FINANCING

 

Business loan requirements will typically include basic information on the business including financing statements and cash flow projections - Often a business plan is required and in almost all instances will help with funding approval. 7 Park Avenue Financial prepares business plans for clients that meet and exceed bank and commercial lender requirements.

 

 

A full-scale business plan might well be required for larger financing - we're typically talking 1 Million ++ $, and that includes solid executive summaries, cash flow forecasts, etc. But in the ' SME “market (small to medium enterprise) (where a lot of action takes place!) that's definitely not necessarily the case.

 

 

We'll point out though that any small business owner/financial mgr in the SME environment who can't provide basic info such as financial statements,  owner info, background story, etc is somewhat doomed to failure in achieving their company financing goals. In some cases, a third-party business financing advisor/consultant might be the best person to move your financing needs forward.

 

Borrowing limits will always be based on the type of financing needed as well as interest rates commensurate with the credit quality of the business.

 

Keep in mind also that whether it’s a small or large amount of due diligence you will always be required to submit a proper application and relevant backup info - For example - aged receivables, payables, articles of incorporation., tax obligations, etc. 

 

The personal credit history of borrowers will always come up in most commercial loan applications, and in small business financing in Canada, the personal credit of owners is closely tied to how they run their companies in the eyes of lenders. Credit bureau scores can be easily checked at firms such as Equifax and a good minimum score tends to be in the 650 range. 

 

 

WHAT ARE THE FINANCING NEEDS OF CANADIAN BUSINESS

 

 

Many companies in Canada are always working on various .. let us call them ' projects ' which require business capital. The challenge is what type of debt capital or cash flow finance will assist them with any particular project. In some cases, it might simply mean complementary funding to existing loans or business credit lines.

 

Although there seem to be more ' service ' oriented companies than ever before thousands of firms continue to have the basic needs revolving around the investment in receivables and inventory they make in funning and growing their business.  Conservation of cash is always important when it comes to running day-to-day operations while keeping long-term goals in mind.

 

 

BOOST BUSINESS GROWTH WITH THE RIGHT FINANCING STRATEGY 

 

 

Many firms like yours might work hard to obtain larger new orders or contracts in perhaps new geographic or product and service segments of your business. Getting those large new orders/contracts places a strain on day-to-day working capital and cash flow needs, so solutions such as purchase order financing or a short-term working capital loan might well be the solution.

 

Other needs for capital might revolve around basic sales and marketing dollars or the ability to purchase additional products at a significant discount when the opportunity arises. We've met many business owners of the years here at 7 PARK AVENUE FINANCIAL who shared with us stories about being able to pay C.O.D. for an order, thereby allowing them to negotiate up to a 5% discount on that prepayment.

 

Let's not forget that your suppliers carry inventory and a/r investments also!    What will always distinguish a company focused on borrowing capital is its ability to show a well-experienced management team and the ability to produce financial reporting as required by any bank or commercial lender.

 

Always ensure you understand the implications that come with new financing when you already have a senior lender in place. The best solution is of course to have a proper ' cobbled together ' suite of finance solutions that bring the desired level of capital and flexibility.

 

AVOID EQUITY DILUTION IF POSSIBLE

 

Debt financing and cash flow financing are non-dilutive in nature - Don't forget that any new owner/equity capital has the effect of diluting ownership - so although debt and cash flow solutions might seem expensive they are always cheaper than giving up equity ownership via the dilution process.

 

Naturally new capital can come in the form of new owner equity (not what we are talking about here today) or debt and asset monetization. ( That's what we're talking about today ), namely true borrowing and working capital solutions.

 

 

DON'T LET LACK OF FUNDING HOLD YOU BACK - UNCOVERING INNOVATIVE FINANCING SOLUTIONS

 

ALTERNATIVE LENDING SOLUTIONS

 

Traditional loans from financial institutions such as banks aren't always accessible by many businesses - As well banks have lengthy application processes and much more strict criteria for loan approval and eligibility. Alternative Financing solutions are available to the business owner for :

 

Refinancing

Cash Flow Moneitzation

Asset and technology purchases

Business expansion

 

What you are starting a business or focused on improving cash flow solid financing solutions can help you stay ahead of the game, grow sales, and be able to meet business needs around unexpected expenses.

 

What then are the basic financial solutions available in SME COMMERCIAL FINANCE? They typically include the following, and all come with a different interest rate and repayment structure -

 

A/R Financing - (includes factoring, Confidential Receivable Financing)

 

Inventory Finance

 

Bank credit lines/term loans

 

Non-bank full business credit lines – ‘ ABL’ loans

 

Equipment Finance/sale-leasebacks - equipment loans

 

GOVERNMENT LOANS AND GRANTS

 

Government of Canada Guaranteed Small Business Loan Program (this just in! New limit is $1,000,000.00) - Probably the best government-sponsored financing program - Many business owners/ entrepreneurs quite rightly look to the government of Canada for financing programs in the Small business sector. No secret that economists tell us that the 'SME' sector in fact drives the Canadian economy.

 

The Canada Small Business Financing Program - ' CSBFP' is a great start for those looking for capital. Although not as robust an offering as its U.S.  SBA /  small business administration counterpart, the 'SBA' program ( what's with all these acronyms?!) is a viable way to start and grow a business. Monthly payments are made under a term loan structure and a limited personal guarantee is required.

 

Of interest is the fact that many franchises are financed through this program, it's close to a perfect fit for that!

 

Government business loans are available to Canadian business owners who are looking for financing. Although the Canadian government has many different programs in place to help all businesses, they tend to focus on providing small business loans the most. After all, keeping small to medium-sized businesses afloat helps add to local economies and makes the country a more diverse and interesting place to live.

 

Government small business loans may be a viable option for Canadian entrepreneurs looking to grow their businesses. Here is some information about Canada’s loan program to help finance small businesses, known as the Canada Small Business Financing Program or CSBFP. Eligibility is for that firm with under 10 M in sales, and even proprietorships and partnerships can apply. The primary assets financed under the program include leaseholds and equipment and even real estate. The program is often, as we noted in the case of franchises, used to purchase an existing business from a seller or franchisor.

 

Many clients we talk to here at 7 Park Avenue Financial are misinformed about what can or cannot be financed under the program - etc.

 

 

SR&ED Loans- Refundable tax credit financing

 

Royalty Finance

 

Franchise Loans

 

Working Capital Loans - Merchant Cash Advance

 

Unsecured cash flow loans

 

 

Our experience tells us that timelines often drive the financing need, with, unfortunately, many clients demonstrating reactive as opposed to proactive financing searches. Some transactions definitely require more time than others to successfully be completed, and unfortunately, some firms don't have the financial resources to control their destinies! Aka ' running out of cash!

 

Can we provide a guarantee around your business financing needs? Yes, we can! We guarantee that your financing search may well become time-consuming and frustrating and challenging! 

 

CONCLUSION - BUSINESS FINANCING, LOANS FUNDING - A ROADMAP TO FINANCIAL STABILITY AND GROWTH

 

Looking for the right financing options to help your business survive.. and grow?! Whether it's a commercial loan from traditional financiers or an alternative lending and funding option it's important to be well-informed about your options. Get the right business advice about your financing needs and get ready to watch your business grow

 

When it comes to debt and working capital financing call  7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with your business finance needs.

 

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

 

What are the main types of financing for businesses?

 

   The main types of financing for a business include:

 

Business credit cards and working capital loans / online lenders

Term loans/installment loans

Government Loans

Lines of Credit

Commercial mortgages

Equipment financing /leasing

Business owners own financial resources 

 

What is the difference between secured and unsecured business loans?  

 

Secured business loans such as business term loans are backed by collateral, such as business assets such as real estate, vehicles, or machinery. Personal assets are sometimes used as collateral for bank-type financing. In contrast, unsecured business loans do not require collateral and are based on the borrower's creditworthiness and when used as a  business line of credit the borrower will pay interest only on funds used. Because secured loans provide the lender with collateral in case the borrower defaults, they typically have lower interest rates and longer repayment terms than unsecured loans.

 

 

 What types of funding solutions are available for small businesses in Canada? 

In Canada, small businesses have access to a variety of funding solutions at competitive interest rates, including commercial loans, business loans, alternative lending solutions, and funding options for specific business needs such as business expansion, starting a business, improving cash flow, and property finance. Each funding solution has its own eligibility criteria, borrowing limits, and interest rates, so it's important to do research to find the right fit for your business. Government small business loans work well for a number of startup and early-stage financing needs and are available from banks and credit unions. The maximum loan amount under the government loan program is 1.1 Million dollars.

 

 

How can I apply for a business loan? 

To apply for a business loan for business finances the business owner will need to provide a detailed business plan, financial statements, and cash flow projections. The interest rate on a business loan is typically based on the Bank of Canada policy rate, plus an additional amount that reflects the level of risk being taken by the lender. It's important to do your research on different lenders and their application processes to find the right fit for your business needs.  Minimum personal credit score requirements in the 650  range is required on most business loans ( as well as personal loans )  - Timing on receipt of loan funds should always be considered as alternative financing typically delivers a faster financial solution.

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

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YOUR COMPANY IS LOOKING FOR   WORKING CAPITAL FIXES!

Guide to Boosting Your Business's Working Capital

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

Financing & Cash flow are the  biggest issues facing businesses today

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

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

EMAIL - sprokop@7parkavenuefinancial.com

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

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

 

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

 

INTRODUCTION

 

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

 

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

 

 

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

 

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

 

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

 

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

 

Employee issues

 

Potential downsizing of your business

 

Inability to grow and expand

 

 

MORE CASH FLOW = BEATING THE COMPETITION!

 

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

 

 

Stay Ahead of the Game: Essential Working Capital Management Techniques

 

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

 

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

 

 

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

 

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

 

CONVERTING ASSETS INTO CASH

 

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

 

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

 

  

THE CASH CONVERSION CYCLE   

 

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

 

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

 

 

  

  

SOLUTIONS FOR YOUR WORKING CAPITAL STRATEGY AND STRUCTURE    

 

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

 

 

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

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

Access to Canadian bank credit

Non-bank asset-based lines of credit

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

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

 

Purchase Order Financing

 

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

 

Securitization

 

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

 

 WHAT FACTORS DETERMINE THE WORKING CAPITAL YOUR BUSINESS NEEDS 

 

Factors determining working capital business needs include -

 

The business model of your industry

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

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

Cash Flow

Business goals of the owner

 

 

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

 

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

 

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

 

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

 

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

What is Cash Working Capital

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

  

What is the relationship between cash and working capital?  

 

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

 

 What are Working Capital Management Best Practices 

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

 

How Does Managing Accounts Payables Affect Cash

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

 

 

 

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

Demystifying Business Credit Lines: Unlock the Full Potential of Your Company's Finances

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YOUR COMPANY IS LOOKING FOR A BUSINESS CREDIT LINE!

CHOICES IN BUSINESS LINES OF CREDIT

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

Phone = 416 319 5769

 

Fuel Your Business Ambitions: How a Line of Credit Can Transform Your Company

 

The Business credit line in Canada.  Most clients we initially meet tend to say 'What are our chances ' when in fact we maintain they should be asking 'What are our choices ‘!   Let's dig in.

 

INTRODUCTION

 

Business lines of credit are a critical financial tool for a business - providing flexible access to cash when funds are needed - allowing a company to manage cash flow and cover short-term day-to-day expenses as well as allowing a company to assess growth opportunities. It's important to understand the advantages of business credit lines and how they are different from other forms of financing such as term loan structures, as well as the types of business lines of credit, their advantages and disadvantages, and how they differ from traditional business term loans.

 

 

WHAT ARE THE TYPES OF BUSINESS LINES OF CREDIT  

 

There are two types of credit lines -  Secured lines of credit and Unsecured business credit lines

 

Secured Business Line of Credit - The secured business credit line requires collateral, typically specific assets in the business such as accounts receivable, and inventory - Asset-based lenders combine fixed assets to further increase the size of the credit line. Business lenders take this collateral as security for the revolving line of credit facility.

 

Unsecured Business Line of Credit -  The unsecured business credit line is typically offered by a bank as opposed to a non-bank asset-based lender- Banks take a general lien on the business as a whole, typically by a loan document known as a GSA/General Security Agreement. It does not specify specific assets but places an overall blanket lien on the business- Personal guarantees are also required in this type of facility, and businesses applying for unsecured business lines should be able to demonstrate good personal credit history of the owners as well as healthy financial statements. Interest rates on unsecured credit lines are typically very attractive and are often the lowest cost of borrowing.

 

 

HOW TO UTILIZE THE BUSINESS LINE OF CREDIT  

 

There are numerous ideal Scenarios for Utilizing a Business Line of Credit - They include:

 

Addressing seasonal or cyclical cash flow gaps in a business or industry

Financing sales growth via new sales of  marketing campaigns required additional short-term

overhead expenses

Seasonal Businesses Seasonal businesses can use a line of credit to cover overhead expenses

during the off-season or bridge cash flow gaps between seasons

Covering unexpected short-term expenses as a safety net in cash flow management, ability to meet

payrolls, etc

Growth - Businesses can focus on growth opportunities around new products or services or markets

without making a long-term capital commitment

 

 

WHAT ASSETS ARE FINANCED IN A CREDIT LINE 

 

The essence of what we're talking about is the type of borrowing in a business loan that's associated with the monetization of assets via a line of credit for a small business. That's current assets by the way, which typically are essentially your A/R and inventory. We'll also discuss monetizing equipment and even real estate in this facility! Access to revolving credit facilities is a valuable tool for any business, large or small.

 

 

REVOLVING CREDIT FACILITIES ARE SHORT-TERM IN NATURE 

 

Business credit lines should be focused on short-term borrowing. Longer terms are associated with term loans for equipment, mortgages on the business property, etc. Naturally, while a term loan expires when you make that final payment business credit facilities are there and available to your firm based on your ongoing level of receivables and inventory.

 

TERM LOANS ARE FOR LONG-TERM ASSETS

 

You will of course want to match the amortization of the term loan with the useful life of the asset. Let's use computers as an example - A typical lease term might be 3 years, and you would want to retire the lease or loan by that time as it is typically time to upgrade technology. But we digress..!

 

 

ASSESSING THE 2 CHOICES IN A BUSINESS LINE OF CREDIT? 

 

And what about those ' CHOICES ' we talked about? It comes down to essentially two solutions for the business revolving line of credit:

 

1. The Canadian chartered bank solution

 

2. The non-bank asset-based business credit line - it’s typically called an ' ABL ' by the industry

 

  

WHY THE RISE OF NON-BANK FINANCING  

 

Years ago any non-bank financing was viewed as an ' alternative ‘, in some cases, there was a perception it was the financing of last resort. Absolutely not the case today as the world of business credit changed dramatically, more so after the 2008 worldwide recession, where many firms, including banks, went under.  That new form of financing, the ABL business credit line all of a sudden seems available and cost-effective in most cases.

 

KEY ASPECTS  OF THE BANK CREDIT FACILITY

 

Bank business credit agreements or those of business credit unions for large companies as well as small businesses tend to be what is known as ' covenant based '. Even if the business owner and financial managers consider the company to be in growth mode it might in many cases not be able to meet some basic debt to equity and cash flow rations that are required by Canadian chartered banks in the terms and conditions of their loan agreements.

 

THE KEY DIFFERENCE BETWEEN BANK CREDIT LINES AND ASSET-BASED LENDING FACILITIES

 

Bank credit lines typically margin just A/R and receivables, and facilities are at a fixed or variable rate benchmarked against the current prime rate.

In the case of an Asset-based business credit facility the borrowing allows you to borrow the market value of the lump sum of all your assets - so that might be a/r, inventory, tax credits, and equipment.

Any unpledged asset becomes financeable. While there is typically a ' credit limit ' in bank facilities ABL lines are more flexible and can increase as your sales and assets grow, pretty well automatically. The ability to get approved for an ABL loan also is typically a much shorter time cycle than more traditional financing through the application process.

 

  

IS THERE A DISADVANTAGE TO NON-BANK OPERATING LINES OF CREDIT?  

 

Recently we were at a client and the CEO asked a very basic question -  ' What then is the downside of ABL ‘.  The answer? Other than a typically higher cost such as the interest  rate on the facility  the benefits are:

No outside collateral required

Higher borrowing power,

Unlimited growth - it’s not a capped credit line per se. While the credit history of your business is important, the focus nevertheless is on ... Business assets & sales!

 

If we had to state one ' downside ' it might be the fact that you are required to report more regularly on your asset lists. In many cases that made most of our clients better managers of their business.

 

Having a good credit line in place allows companies to avoid higher cost interest charges for short-term working capital loans, merchant advances, business credit cards, etc - Those latter 3 work but are not optimal for day-to-day funding of your operations and also demand a focus on the credit score/credit rating of the business owner/owners.

 

The business owner must balance the cost of capital versus access to sorely needed capital to run and grow the business. Important to know is the fact that of course you only pay interest on the amount of the facility you are using, as that amount will fluctuate depending on the inflows and outflows of cash in your business - every company has a different operating cycle.

 

Bank business credit is always going to be low-cost and flexible if your firm meets traditional criteria. When it doesn’t the business owner should know that he or she has another choice, the ABL line. And by the way, many clients often try ABL for a year or so and then are faced with the decision that they are eligible to be ' bankable ' in the traditional sense.

 

 

WHAT IS THE DIFFERENCE BETWEEN A LINE OF CREDIT VS.  A TERM LOAN 

 

Term loans and lines of credit are 2 different types of financing - for term loans banks and commercial finance companies and asset-based lenders focus on the current financial health of the business - term loans provide a fixed lump sum installment of capital with periodic payments structured as repayment of the loan

Business credit lines are revolving facilities that allow companies to draw funds as they need them and they pay interest only on the funds that are used under the facility - That is why credit lines are suited to general working capital and cash flow needs giving business flexibility of when to borrow for specific purchases.

 

  

  

CONCLUSION - REVOLUTIONIZE YOUR BUSINESS CASH FLOW WITH THE POWER OF A BUSINESS LINE OF CREDIT     

 

Business credit line facilities give a business the flexibility to manage cash flow needs and fund day-to-day operations - Business owners must assess what type of credit facility meets their specific needs that will allow the company the financial flexibility it needs in different market conditions in today's competitive landscape.

 

Bottom line. You have a choice in your business credit needs. Call  7 Park Avenue Financial,  a trusted, credible, experienced Canadian business financing advisor with a credible track record who can help you facilitate the business credit line you need.

 

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

 What is a business credit line? 

A small business line of credit is a flexible business financing option that provides established businesses with access to a predetermined amount of capital under a credit limit,  the facility is used by the business as needed for various short-term financial needs. Unlike term loans, lines of credit allow businesses to borrow, repay, and borrow again (similar to a business credit card ) under the revolving nature of the credit lines, up to the approved credit limit. The company does not have to continually reapply for business credit under this type of financing tool. An unsecured line is often offered by banks to established businesses. A monthly or annual fee may apply to a credit facility.

 How long do you need to be in business to get a line of credit? 

The length of time a business needs to be in operation to qualify for a line of credit varies depending on the individual lender and the requirements around the size of the facility. Typically businesses that have been operating for at least two years are eligible for a bank or credit union facility, as it demonstrates stability and a track record of business success. However, some lenders such as asset-based lenders may offer lines of credit to newer businesses, depending on their financial performance and other factors around collateral and guarantees.

 Is personal credit checked for a business line of credit? 

Yes, personal credit is often checked when applying for a business line of credit. Many lenders consider the personal credit score of the business owner or primary applicant as an indicator of creditworthiness and financial responsibility. While having a strong business credit profile is essential, a good personal credit score can also help increase the chances of being approved for a line of credit and secure better terms. Asset-based lenders place less emphasis if any at all on personal credit history, but banks place a high level of emphasis on the credit history and net worth of the business owner in assessing a higher credit limit. Online lenders offering credit facilities also focus on the business owner's credit score.

 

 Does a business line of credit affect credit score? 

A business line of credit can affect both personal and business credit scores, depending on how the credit line is managed and the nature of the personal guarantee. If the business makes timely payments and maintains reasonable balances that fluctuate in the facility,  relative to the credit limit, it has a positive impact on credit scores. Late payments, high balances, or defaults can negatively affect credit scores. It is essential for businesses to build business credit responsibly to maintain a strong business credit profile. The minimum credit score required by most institutions is 650.

 

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

Revolutionize Your Business with Alternative Finance Business Loans / Alternative Finance Business Loans: Breaking the Barrier to Business Financing

 

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YOUR COMPANY IS LOOKING FOR  BUSINESS LOAN  SOLUTIONS!

Innovative Funding Solutions: How Alternative Finance Business Loans are Changing the Game

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

 

The Rise of Alternative Finance Business Loans: How to Capitalize on this Growing Trend

 

Business loan success, whether it's bank loans or alternative finance often has owners/managers wondering if they've got what it takes.

 

 

INTRODUCTION

 

Small and medium sizes business owners know they are the backbone of the Canadian economy. But financing their businesses with traditional bank loans can be a major challenge, if not impossible. Alternative lending options can provide that access to business capital on terms that often can be more flexible than bank loan financing. Let's take a look a the type of financing available and which type of alternative lending solution might be suitable for your business.

 

We're going to try and eliminate the word ' painstaking' from your challenges around funding your company in the SME COMMERCIAL FINANCE marketplace. Let's dig in.

 

 

WHAT IS ALTERNATIVE LENDING? 

 

Alternative lending is a type of business financing that provides access to capital outside of traditional banks, most notably bank financing. Various types of  Canadian business financing solutions are available under the 'alternative lending ' umbrella - from term loans to business credit lines, as well as numerous other specialized niche financing solutions that are cash flow and debt finance based.

 

Demand for alternative financing is increasing among early-stage firms and smaller businesses that are growing - Many tech companies in the ' fintech ' business landscape benefit from these alternative lending services versus traditional financing, with a new level of funding confidence to borrowers.

 

 

Alternative business lenders provide quick access to capital and are flexible in nature - often custom-tailored to a company's unique situation.

 

Business funding needs arise out of a number of requirements for any owner/mgr who is focused on growing the company's sales. Typically those needs come from the desire to expand, introduce new products or take on new contracts, or even acquire a competitor.

 

 

  

HOW DOES ALTERNATIVE BUSINESS LENDING WOR  K?

 

Understanding how alternative business lending works is all about the type of loan and business financing you are looking for - As in any type of business finance, your firm must be able to demonstrate repayment. Alternative lenders offer more flexible and less restrictive qualification criteria around the numerous financing solutions available.

 

The main benefit business owners see in alternative finance funding is faster approval than more traditional financial institutions such as banks - Amortizations vary by type of loan, but it can be stated that alternative loans are typically more short-term in nature - Whether it is asset-based financing or a cash flow financing payments are structured around the unique business model and industry of the borrower.

 

Interest rates in alternative finance are more competitive than even, in some cases they are competitive and lower than bank financing but on balance, alternative financing costs more but provides access to capital.

 

 

Are Alternative Finance Business Loans the Key to Your Company's Success? 

 

 

Financing your business can come from traditional (typically ' bank ') or nontraditional finance sources. Suffice it to say alternative finance has been very much on the rise since the great recession of 2008-9 and the Covid pandemic of recent times!

 

Each category of loan has different requirements that will help guarantee financing success- therefore our question is - Have you got what it takes?

 

Small and medium-sized firms, whether you like it or not have both traditional and alternative lenders looking at owner finances and credit history. While many newer forms of alternate finance (asset-based business credit lines, a/r financing, sr&ed tax credit financing, etc)  place much less emphasis, and in some cases almost no emphasis on the personal credit of owners suffice to say a higher personal credit score is better!

 

The absolute fundamentals of any business loan revolve around your ability to provide, or at least ' talk to ' a business plan and cash flow and revenue forecast. These are very basic requirements - they are not rocket science. Also, this is not a good time to be a dreamer - realistic projections win.

 

GOVERNMENT LOANS

 

In some cases, all the financing you might need will be ' collateral ' based. Hopefully that’s business collateral and not personal assets! As an example the GOVERNMENT GUARANTEED SMALL BUSINESS LOAN requires no personal assets to be pledged, and actually finances leasehold improvements as well as fixed asset/equipment needs.

 

Recent changes in 2022 to this federal government loan program included a new cap on financing being increased to 1.1 Million, as well as numerous other finance categories being available under the loan program such as lines of credit, working capital, intellectual property, franchise fees, etc! Government small business loans come with attractive interest rates and limited personal guarantees, unlike a traditional bank loan which requires a full guarantee and potential external collateral.

 

Also, many EQUIPMENT LEASING firms are able to finance your asset and equipt. needs without outside collateral or a focus on personal owner credit.

 

 BANK LOANS 

 

Finding a great commercial business banker (notice we said banker, not bank) is worth its weight in gold. Given that Canadian banks are the closest thing to an oligopoly (think monopoly) loan requirements rarely differ at banks. Your banking success will deliver loan rates and unlimited access to capital if... and it is a clear "if"... you have:

 

Owner personal credit

Business commercial credit history

Assets

Cash Flow

Mgmt Depth

 

 

TYPES OF ALTERNATIVE BUSINESS LENDING

 

As we have said each business financing category has some absolute basic requirements. Some of the basics in the alternative finance category? They include:

 

Term loans - These loans tend to be short-term working capital loans/ merchant cash advances with simple qualification criteria based on a formula of sales and the owner's personal credit history. Repayment tends to be over a 1-year period and financing is quickly accessible, even from an alternative lender such as fintech online lenders, but financing costs are high for small businesses.

 

A/R Financing/ invoice factoring  -   Any business with growing sales can benefit from receivable financing - Financing is based on the size and quality of your receivables  and factoring facilities allow a business to receive funds as the business generates sales for its products and services - Financing charges are based on a small percentage of the invoice amount, and the  requirement to show aged receivables of reasonable credit quality  must be met - Invoice financing is probably the most popular type of alternative finance used by Canadian businesses

 

Inventory Finance - A marketable inventory of goods that can readily be priced and sold as the fundamental collateral of an inventory loan

 

Non-Bank Asset Based Lines Of Credit - receivables, inventory, and fixed assets are combined into one borrowing facility that can be used on an ongoing basis - Funds are drawn as needed and the business pays for only the amount of facility used in these alternative business loans that mirror bank lines of credit

 

Sr&ed Tax Credit Financing - the ability to produce a credible SR&ED claim with appropriate documentation - Any Canadian business that conducts r&d is probably entitled to receive refundable tax credits under Canada's Scientific Research and Experimental Development (SR&ED) Tax Credits. While most companies are eligible for these credits, it can take months before claims are approved- Companies can access sr&ed  tax credit loans, allowing companies to receive immediate access to their accrued investment tax credit refund.  SR&ED financing benefits the company and helps Canadian companies focus on R&D and advances innovation in Canada.

 

EQUIPMENT LEASE FINANCING - Businesses requiring new assets and technology to increase new equipment to increase production can benefit from equipment lease financing. Businesses can finance new and used equipment and lease financing is a solid cash flow management tool that conserves existing credit lines and helps match cash flows against the life of the asset being financed.

 

Bridge Loans/Sale Leasebacks - equipment or real estate assets that have been appraised or valued to mutual agreement between business owner and the lender

 

  

CONCLUSION - UNLOCKING THE POWER OF ALTERNATIVE FINANCE BUSINESS LOANS FOR CANADIAN BUSINESS  

 

Most SME businesses in Canada will eventually face the challenge of accessing capital - while Canadian banks are the primary ' go to ' the inability of the banks to fund many businesses because of their borrowing guidelines ultimately hinders the growth of many businesses, Startups have an even bigger challenge - Canadian business is turning to alternative lenders to access the funding they need for their growing businesses.

 

Still not feeling like going it alone? In many cases, your firm has the ability to improve both improve or make more attractive your loan success by working with 7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with your business loan, banking needs, and alternative solutions for small business owners and growing businesses who can't access traditional loans.

 

  

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

 

  

 What are the pros and  Cons of Alternative Business Lending   

 

Alternative financing is easier to qualify for and funding approval is quicker than banks and business credit unions. Application criteria are generally less strict so companies looking for financing can address cash flow issues with various types of cash flow and debt financing solutions in alternative lending.

The downside to alternative financing via an alternative business loan is the higher cost of borrowing given repayment periods are typically shorter- In some cases, additional collateral and personal guarantees may be required.

 

 

What is BDC’s Working Capital Financing 

 

BDC / Business Development Bank is a government crown corporation, a non-bricks and mortar bank, unlike traditional lenders,  that provides business financing to entrepreneurs. BDC’s working capital financing solutions allow businesses to finance growth projects and launch new business initiatives, BDC is a complementary lender and its financing solutions complement existing business lines of credit.

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

ALTERNATIVE BUSINESS FUNDING IN CANADA

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You Are Looking For Business Funding Choices! 

Redefining Business Financing: The Rise of Alternative Funding Solutions

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

 

 

  

Alternative Business Funding: The Game Changer for Small Business Success  

 

 

Alternative business funding allows many smaller firms to.. get big!

 

For both sales growth and growing profit margins, it's essential to have the proper business financing in place - most business owners and financial managers recognize that.

 

 

INTRODUCTION  

 

Today's fast-paced business landscape is more competitive than ever -  Business funding solutions have become critical- But when traditional bank loan type financing is not able to be accessed for a variety of reasons around strict requirements and long application times what does the business owner do?

 

At 7 Park Avenue  Financial, we have got an answer - alternative financing!  It bridges the gap and can provide your company with financing that is flexible, and more importantly accessible!    These solutions provide a business with business capital to grow and thrive - It's important to understand which of these financing options is best suited for your firm. Let's dig in.

Is the bank the only option? Categorically no, although most business owners for whatever reason view the bank as the only solution - only to be rejected for a variety of reasons, one of which is actually ' size ' believe it or not. While our Canadian chartered banks do a great job in financing large firms, they have numerous criteria in place that your firm might not be able to meet.

 

WHAT IS ALTERNATIVE FINANCING? 

 

 

Alternative financing from alternative business lenders is any method of business financing which allows a business to acquire capital outside of traditional banks and other more traditional financial institutions. These non-bank commercial financing companies and asset-based lenders offer different funding options and alternative loans based on a company's qualifications and needs.

 

The business chooses alternative finance solutions as credit requirements are lower and funding is easier to qualify for - Additionally, a faster approval process compared to bank approvals provides funding around business expenses, growth and the need for ongoing cash flow.

 

  

Break Free from Traditional Loans: Unleash the Power of Alternative Business Funding & Financing Benefits 

Banks often focus significantly, especially in the SME sector ( small and medium enterprises), on the business owner's and principals' personal credit history. They look for solid and high credit bureau scores, and low scores can impact your firm's ability to get a loan.

 

In some cases, banks might even determine an entire industry; for example, oil, autos etc., may for a time be... ' out of favour.' Canadian business history has plenty of examples of that. Occasionally banks might deem that a major customer of your firm actually creates a 'concentration ' risk.

Alternative funding sources allow business owners to position the business as the major reason to achieve credit approval. Business funding alternatives become more accessible in alternative finance because it's the business under the microscope, not so much the owners.

In today's environment, business capital for cannabis firms is in high demand. Banks have been reluctant to address all facets of cannabis financing, although this has ' slowly,' and we do mean ' slowly ' changing.  Alternative funding sources, via non-bank commercial finance companies, provide finance solutions.

Cash flow is a major factor in assessing business loan potential. Business owners and their financial managers should be positioned to address the ins and outs of cash flow, i.e. sales growth, seasonality, collections, payables, etc. Many alternative funding solutions allow you to grow revenues when traditional bank financing is not available.

 

ALTERNATIVE BUSINESS FUNDING SOLUTIONS IN CANADA

Solutions for More Business Capital Via Alternative Business Funding Companies

Non-bank receivable financing / Invoice Factoring -  Invoice financing via factoring is a business financing solution that allows companies to sell/finance to sell their outstanding invoices to a third-party commercial finance company / factoring company at a discounted rate in exchange for immediate cash. This method of financing is valuable for businesses that experience long payment terms and collection challenges from their customers based on payment terms or the need to improve their cash flow.

Advantages include improved cash flow management and the ability to run and grow the business without the constant need to ' chase customer payments' - Companies using factoring solutions from alternative lenders such as Confidential receivable financing should have good sales and profit margins.

 

Inventory Financing

Purchase Order Finance

Non-bank asset-based business credit lines - non-bank business lines of credit provide a flexible revolving credit facility to businesses that can draw down on capital when they need it without term loan-type obligations. These credit lines are custom-tailored and flexible and combine the company assets such as accounts receivable, inventories, and fixed assets as well as company owner commercial real estate into one single borrowing facility - Interest rates are higher than bank financing but eligible requirements and the lack of covenants is making this business finance solution more popular.

 

Tax Credit Financing - SR&ED Tax credit financing helps to finance research and development under Canada's sr&ed program

Lease Financing  & Sale-leaseback of assets - Equipment financing and sale-leaseback solutions allow for the financing and purchase of new assets and technology required by the business - An excellent option for capital-intensive businesses.

 

Short-Term Working Capital Loans  / Merchant Cash Advances  -  the merchant cash advance /short-term loan funding solution is an easily accessible working capital solution that is based on a formula or sales and owner personal credit history. Funds can be secured very quickly and flexible payment terms around cash inflows are offered via online lenders - these loans are higher cost.

 

 

HOW DO YOU CHOOSE THE RIGHT ALTERNATIVE FUNDING SOLUTION FOR YOUR BUSINESS  

 

Choosing the right  alternative funding solution for your business should be based on your cash needs, and the overall financial situation and growth challenge - Factors to consider include -

 

1. Eligibility: Determine which business financing  options are available to your business based on your business credit score quality and financial strength, as well as the particular needs of your business model and industry

2. Financing  amount required: Assessing  the amount of capital your business needs and ensuring the maximum financing requires is available via any 1oneor combined solution

3. Cost: Consider  financing costs, interest rates, fees, and repayment flexibility offered via any funding solution that meets your repayment ability 

4. Speed: Evaluate how quickly  funds are needed  vis a vis timeline required to properly complete the funding process

5. Flexibility:  Compare structured term loan type solutions to more flexible solutions such as a/r financing.
   
   We think you get the picture, and you don't necessarily have to take on ' debt ' to address capital and cash flow needs, as many of our above-noted solutions monetize assets or sales.
   
   Be prepared when approaching an alternative business funder - financials, a  business plan, and info on current lenders are a great start.

  

 

 CONCLUSION - ALTERNATIVE BUSINESS FUNDING - THE GAME CHANGER FOR BUSINESS SUCCESS

 

  

When traditional bank loans become increasingly challenging the small business owner can look to alternative financing for financial support. Companies find the perfect solution that is custom-tailored and suited to business needs and long-term goals - allowing a business to prosper and consider growing.

Bottom line? Your business has lots of funding options, traditional and alternative. Seek out a speak to trusted, credible and experienced Canadian business financing advisor with a  track record of success in alternative funding sources for small business.

 

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

What is the most popular type of alternative loan?  The most popular type of alternative loan is a term loan. Term loans are lump sum installment business loans repaid over a period of time - typically 1-5 years, These loans tend to fund specific projects such as asset acquisition, or expansion. Both traditional lenders and alternative business financing lenders/funders provide this type of loan.    What is the difference between traditional and alternative financing?  Traditional financing typically involves borrowing money from a bank or other more traditional financial institution, such as a business-oriented credit union. Commercial borrowers must have strong financial statements, and collateral, and be able and willing to provide a personal guarantee. Alternative business loans and finance solutions come from commercial financing companies and asset-based lenders who are non-bank in nature. Alternative finance business funding tends to be more accessible for the business borrower.   How do startups get business funding? Startups obtain funding for small business loans from various sources, including traditional financing, banks, or equity-oriented business capital via venture capitalists, and angel investors. Solutions for alternative funding for startups from a government-guaranteed small business loan from a bank or credit union as well as grants are also available - Many communities offer start-up accelerators and incubators offering different types of infrastructure support for start-ups and small businesses.

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