Business Funding Expert Tactics For Your Company

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You Are Looking For a Canadian Business Financing Expert!

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

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

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

        Financing & Cash flow are the  biggest issues facing businesses today 

               Unaware / Dissatisfied with your financing options?

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

Email - sprokop@7parkavenuefinancial.com

 

 

INTRODUCTION 

 

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

 

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


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

 

 

 

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

 

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

 

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

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

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

 

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

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

 

  

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

 

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

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

 

 

WHAT IS THE RIGHT FINANCING STRATEGY FOR YOUR BUSINESS?

 

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


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

 

 

WHAT ARE THE KEY PARTS OF A BUSINESS FINANCE APPLICATION

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

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

 

THESE BUSINESS FINANCING SOLUTIONS ARE AVAILABLE TO YOUR BUSINESS

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

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

Chartered bank lines of credit

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

A/R Financing - aka ' factoring and invoice discounting

Inventory Financing

Tax Credit Finance

Equipment Finance and sale-leaseback strategies

Commercial mortgages

 

  

KEY TAKEAWAYS: BUSINESS FINANCING  

 

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

Government Loans and Grants are available for small and new businesses

Specialized financing is available based on the business model and industry

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

 

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

 

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

 

 

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

 

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

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

 

 FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

 

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

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

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

 

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

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

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

 

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

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

 

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

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

 

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

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

 

 

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

 

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YOUR COMPANY IS LOOKING FOR FINANCING ALTERNATIVES!

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

WHAT TYPES OF FINANCING DO YOU NEED?

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

Financing & Cash flow are the biggest issues facing businesses today

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

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

EMAIL - sprokop@7parkavenuefinancial.com

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

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

 

                                                           

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

 

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

 

 

WHAT IS ALTERNATIVE  BUSINESS FINANCING? 

 

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

 

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

 

 

  

SOLVING THE SME / SMB BUSINESS CAPITAL CHALLENGE

  

 

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

 

MANAGING FINANCIAL STRESS IN THE BUSINESS

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

 

 

WHAT ARE YOUR ALTERNATIVES IN BUSINESS FINANCE 

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

 

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

 

They include:

Non-bank business lines of credit

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

Purchase Order Funding

Tax Credit Finance

Sale-Leaseback

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

Term Loans (Cash Flow-Based)
 

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

 

 

GOVERNMENT LOANS AND BUSINESS GRANTS  

 

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

 

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

 

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

 

 

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

 

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

 

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

 

 

  

WHAT ARE THE REQUIREMENTS FOR BUSINESS LOANS IN CANADA   

 

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

 

 

  

  

HOW IMPORTANT IS EXPERT ADVICE FOR THE FUTURE OF YOUR BUSINESS    

 

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

 

  

MANAGING A TURNAROUND  

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

 

  

THE STARTUP CHALLENGE   

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

 

 PERSONAL GUARANTEES, ETC! 

 

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

 

  

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

  

 

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

 

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

 

 

 

CONCLUSION - ALTERNATIVE SOURCES FOR FUNDING BUSINESS GROWTH

 

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

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

 

   

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION  

 

 

What are some options for financing a business? 

Options for  financing a business include:

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

Friends and family loans

Crowdfunding/Angel investor's equity partners

Government Small Business Loans / Government grants

 

       

 

How do you fund a business expansion?        

Business expansion can be funded via:

Business loan debt financing

Government business loans

Equity partners

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

 

  

What is the most common form of financing a business?

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

 

 

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

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

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YOUR COMPANY IS LOOKING FOR CANADIAN BUSINESS FINANCING! 

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

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

        Financing & Cash flow are the biggest issues facing businesses today 

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

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

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

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

 

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

 

 

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

 

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

 

UNDERSTANDING BANK FINANCING / BANK CREDIT LINES / UNSECURED LOANS

 

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

 

 

 

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

 

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

 

ASSESSING THE NEED FOR A SOLID LINE OF CREDIT SOLUTION

 

 

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

 

 

- You are consistently maxed out on the operating line

 

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

 

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

 

 

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

 

That’s true asset-based financing!

 

  

HOW DO ASSET-BASED LENDING SOLUTIONS INCREASE BORROWING POWER  

 

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

 

 

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

 

 

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

 

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

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

No focus on historical cash flow / financial covenants

Encourages financing for high-growth firms

Allows the company to leverage business opportunities

 

 

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

 

  

CONCLUSION  

 

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

 

 

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

 

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

 

 

 FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION 

 

 WHY CHOOSE ASSET BASED LENDING OVER SECURED LOANS? 

 

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

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

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

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

 

 

  

WHAT IS THE ASSET BASED LENDING DUE DILIGENCE PROCESS  

 

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

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

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

 

 WHAT IS THE DIFFERENCE BETWEEN ASSET BASED LENDING AND FACTORING?  

 

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

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

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

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

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

 

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

Mastering Business Financing and Lending Sources : A Comprehensive Guide for Entrepreneurs

 

YOUR COMPANY IS LOOKING FOR SOURCES OF BUSINESS FINANCE ! 

Unlocking Your Business Potential: Exploring Business Financing and Lending Solutions

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

        Financing & Cash flow are the  biggest issues facing business today

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

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

EMAIL - sprokop@7parkavenuefinancial.com

 

Discover the Power of Business Financing and Lending: Fueling Growth and Expansion for Your Company

 

 

Business financing! You've heard the rumour, namely that business lending is more available than ever. Whether it's small business funding or medium to larger corporations we hear capital is almost unlimited.

 

INTRODUCTION

 

For any company in Canadian the ability to access business financing lending solutions is critical, more so for the SME sector which always has a capital challenge. Proper financing and access to capital help businesses overcome growth challenges, allowing companies to seize opportunities that arise.  Understanding what business loans are available and what the benefits of financing are is key to considering traditional and specialized alternative financing solutions for business needs.

 

 

UNSECURED  BUSINESS LOANS - CANADIAN  BANKS 

 

Unsecured business loans in Canada do not require the borrower to pledge specific assets as collateral - Banks focus on an overall view of business and owner credit history, with a focus on profits and business cash flow projections.

But for those firms that for a variety of reasons can't qualify for all or even some of the financing they need from traditional sources such as Canadian chartered banks, there is hope - in the name of asset-based financing options.

 

WHAT STAGE OF BUSINESS IS YOUR COMPANY IN?

Let's backtrack a bit and understand that a company, from a lender's perspective, will always be identified relative to what stage of the company  ' life cycle ' it is in.

 

That might come in several stages, going all the way back to pre-sales revenue r&d  to initial start-up. It's a long journey to that ' high growth' stage. And it's not hard for the entrepreneur to dream about that final stage of business maturity where traditional financing sources are unlimited.

Have we forgotten anyone? Yes, we have, and it's prudent to mention that many companies, for a variety of reasons, are financially challenged and have poor financial performance and some serious cash flow or debt problems. Suffice it to say the good news here is that even these firms can be financed or re-financed, as numerous alternative-based finance solutions are available.

Many firms often find themselves in the position of taking on larger orders or contracts that typical small business funding solutions can't deliver on.

 

 

Purchase Order Financing  - This is an increasingly popular method for a company to support purchase orders or contracts from new or larger clients. Without having to raise new equity or debt your order is financed by the lender based on who your client is and also ensuring you have a legitimate supplier. This financing can be achieved very quickly and makes sense when traditional finance doesn't work.

Accounts Receivable Factoring -  This type of finance allows you to cash flow invoices immediately after you make a sale or deliver your services. The general creditworthiness of your clients allows you to get advances on your sales typically in the 80-90% of the invoice value. Naturally, this eliminates waiting to get paid, which these days seems to take anywhere from 30 to ..dare we say it.. 90 days!

Businesses should investigate Confidential Receivable Factoring  Financing - allowing businesses to achieve all the cash flow benefits of factoring and a/r finance with the ability to bill and collect their own invoices.

Simply speaking A/R financing is a cash flow accelerator!

 

  

SECURED  BUSINESS LOANS / ASSET-BASED LENDING  

 

Asset-based financing solutions allow companies to pledge specific physical assets of the business such as accounts receivable, inventory,  fixed assets and equipment, and commercial real estate owned by the business. Thousands of small businesses in Canada are gravitating to alternative finance solutions.

Non-Bank Business Credit Lines -  Alternative financiers offer credit lines based on your inventory, receivables and equipment as a lump sump collateral. In our experience, these credit lines almost always exceed the amount you would receive under typical bank margining of these assets.

 

  

START-UP LOANS / SMALL  BUSINESS LOANS, AND GOVERNMENT LOANS AND GRANTS  

Starting and growing a business is always a challenge - most early-stage businesses lack business assets as well as the track record that a business lender is looking for. Business plans are essential and will include information on the company and business model,  information on owners, and projected sales and profits - 7 Park Avenue Financial prepares business plans that meet and exceed lender requirements.

Small business loans of various types, both traditional and alternative can provide the cash a business needs to grow or improve production via new assets or technology. Financing is also available in the form of inventory financing, leasehold improvements finance,  and acquisition of assets.

 

 Government Loans and Grants - Canada Small Business Financing Program (CSBFP) 

 

Government loans and grants are always available for funding a business - they are attractive to many business borrowers as loans are typically unsecured and have favourable repayment terms and competitive interest rates. Qualification criteria also easier to receive credit approval compared to traditional chartered bank financing.

 

The Canada Small business loan program is available for any business with under 10 Million dollars of actual or projected revenue. The government bears the majority of the risk with bank and credit union lenders that participate in the program.

 

The loan amount cap on the program is 1.1 Million dollars and recent changes in 2022 to the program greatly increased financing capability, with companies being able to borrow under a term loan structure, as well as lines of credit and working capital and funding of intangible assets. Traditional uses of the program have been the ability to fund leasehold improvements, new equipment purchase assets or technology, as well as acquiring real estate. A business loan calculator will allow simple calculations around monthly payments, amortization, etc. A minimal personal guarantee is also a favourite part of the program.

 

Talk to the 7 Park Avenue Financial team about the government SBL program and the application and process around this popular method of financing business from participating financial institutions,

 

CONCLUSION -  BUSINESS FINANCING BUSINESS LENDING FUNDING

 

As a business owner, you need to understand the different finance options available to grow and succeed in the ultra-competitive markets of today.  Selecting the right lending solution to support growth is key - whether you are looking to fund day-to-day operations, access government loans and grants, buy a competitor, etc. Knowledge of the business lending landscape is key!

 

If your business is growing, or even experiencing challenges investigate non-bank solutions that will allow your firm to be in a  constant position to access capital based on specific needs.

 

Seak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with business advice and success in achieving business lending solutions.

 

  

  

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

 

  

  

What are the best possible sources of business financing?  

 

The best possible sources of business finance include:

Bank loans

Government Loans / Grants

Venture capital/ angel investors

Supplier Financing/ trade credit

Invoice Financing / Factoring

Personal savings / Friends and family

Business credit cards

Short-term working capital loans - lump sum payments via monthly payment based on sales/owner personal credit score - higher interest rate but quickly accessible financing

 

How do you finance business growth?

 

To fund growth and expansion businesses  should investigate:

Reinvestment of earned profits  - they do not bring debt to the balance sheet and do not dilute owner equity

Bank financing for cash loans,  equipment purchases and working capital

Government-guaranteed loan programs 

Unlock Your Company's True Potential: Asset-Based Lending for Business Financing

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YOUR COMPANY IS LOOKING FOR CANADIAN ASSET-BASED LENDING SOLUTIONS!

 

Revolutionize Your Business Growth: Financing a Business with 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   

 

 

Elevate Your Business Strategy: Unleash the Potential of Asset-Based Lending for Financing

 

 

Business finance solutions in Canada are regularly delivered via asset-based lending and financing.

 

The small business owner and financial manager who hasn't heard of (or checked into) this type of funding solution/business loan solution, might mistake this for a new 'secret' financing strategy, and it is not equity financing. Frankly, though, the secret is out! These days small businesses are relying on everything, including credit cards!  So let's dig in.

 

Asset based lending, aka ' ABL ' is an increasingly popular business financing solution that allows a business to capitalize on the assets and sales of the business - In that way companies can fund expenses and ongoing operations, fulfilling client orders, and purchase inventory and other investments the business must make.

Companies looking for flexible financing to meet their business planning needs used asset-based finance, versus traditional loans,  for lines of revolving credit, term loans, or in many cases a combination of both.

 

 

 

  

ALTERNATIVE LENDING VIA ASSET BASED LOANS

   

 

Asset-based loans (‘ABL') are often considered an 'alternative' strategy in the brave new world of nontraditional and 'fintech'  business solutions. But guess what? Main Street uses this form of financing everywhere in Canada, in all industries, and all sizes of companies. Bank loans come at a great interest rate but are difficult to access for thousands of companies for the funding and growth potential solutions they need.

 

 

 

WHAT ARE THE DIFFERENT TYPES OF ASSET BASED LENDING?  

 

Asset-based lending offers asset loan arrangements secured by accounts receivable, inventory and fixed assets. Business financing via Asset-based lending in Canada differs based on the financial transaction size and the methodology around which day-to-day transactions are handled and which assets are being financed by the lender.

 

 

We can broadly put ‘ABL' solutions into several key categories.

 

CATEGORIES AND TYPES OF OF ASSET BASED FINANCING

 

Non-bank business lines of credit

 

A/R Financing

 

Inventory Financing

 

Tax credit financing

 

Sale Leasebacks

 

Working capital term loans/merchant loans

 

Commercial real estate loans

 

 

There are different levels of due diligence in setting up any of these facilities - most asset-based loans are dependent on facility size, the industry your firm is in, and the quality of your assets being financed.

 

 

 WHAT ARE SOME USES OF ASSET BASED LOANS? 

 

At 7 Park Avenue Financial, we demonstrate the flexibility of  the asset-based loan solution by explaining the multitude of uses of this method of business financing

 

ABL loans:

 

Improve access to working capital and the company's cash flow for the funding day-to-day business needs

 

They allow  companies to satisfy large contracts and orders from clients which require the purchasing of inventories and materials to fulfill those orders

 

Asset-based financing allows businesses to fund growth and increase capacity for products and services

 

Asset-based term loans allow a business to acquire assets and technology

 

Many companies use the ABL solution to fund a turnaround or restructuring for firms  that might have some level of financial distress

 

Acquisition financing needs to acquire a competitor or another business is often fulfilled via an ABL solution when strategic acquisitions are contemplated - including leveraged buyouts relying on asset values of the target acquisition

 

  

  

ASSET BASED LENDING VERSUS BANK FINANCING     

 

When Canadian business owners and financial managers sit down with us and ask us to explain 'asset-based lending'  as a new type of financing, we cover a fair amount of ground, as there are various types of 'ABL' facilities compared to bank loans which are typically term loan in nature or unsecured lines of credit.

 

  

  

WHAT ARE THE BENEFITS OF ASSET-BASED LENDING?    

 

 

  

Improved liquidity   &Increased Flexibility   

 

The benefits of asset-based financing? They are pretty basic - you will often differentiate yourself from your competitors given you have increased amounts of capital and cash flow - allowing you to secure more sales/contracts, as well as enhancing relationships with suppliers and other lenders you might have in place. In many cases, ABL finance addresses the seasonality challenge you might have in your company/industry.

 

  

SUMMARY OF KEY BENEFITS OF ASSET BASED FINANCE  

 

Improved cash flow and  additional working capital liquidity

 

Flexible/versatile financing custom-tailored to a company's business model and asset base

 

Ease of credit facility management - no focus on covenants, outside collateral or personal credit history/credit ratings of owners

 

Faster access to financing compared to traditional bank loans  and other traditional financial institutions

 

In certain circumstances, a lower financing cost/interest rate  can be achieved for higher quality or large  transactions

 

WHAT BUSINESS ASSETS DOES  ABL FINANCING FUND?

 

Asset-based lending is simply the monetizing of your assets to their maximum cash availability.  The most common assets financed include:

 

A/R ( Accounts receivables )

 

Inventory

 

Fixed assets

 

Real estate

 

Technology

 

  

  

PURCHASE ORDER FINANCING IS A PART OF THE ASSET-BASED LOAN SOLUTION    

 

While 'purchase orders' of new 'contracts aren’t technically an asset on your balance sheet, asset-based lending includes PO / CONTRACT financing solutions! The emphasis is clearly on your 'assets‘!

 

WHEN DOES ASSET BASED LENDING REPLACE BANK FINANCING

 

ABL business finance frequently replaces traditional bank financing, or in many situations, provides more cash flow and working capital that banks can't deliver on due to their lending constraints. This is no more evident than in the SME COMMERCIAL FINANCE sector. Flexibility is often the differentiator given that ABL solutions don’t rely as heavily on ratios, covenants, outside collateral, personal guarantees, etc. Note though that costs of this type of financing are almost always higher - so the decision becomes access to capital versus the cost of capital!

 

Asset-based lenders do not place the same emphasis on credit scores as unsecured loans from traditional banks.

 

WHAT DOES ASSET BASED LENDING COST

 

We spend a lot of time with customers showing us how some of the 'perceived' higher costs are, in fact, not really that due to the ability of the company to convert assets into cash and repeat their business cycle over and over, generating additional profits based on faster inventory turns and receivable collections. 

 

One of the tools we use is the 'DUPONT MODEL,' which will clearly demonstrate to our customers how asset turnover affects profits. It's a great financial tool!

 

  

HOW DOES ASSET BASED LENDING WORK?   

 

ABL financing focuses on the valuations of business assets as collateral for loans - Asset based lenders establish what is known as borrowing based on which defined advance rate margins are put in place as a lending percentage of the  asset based credit facility  - Borrowing capacity is almost always greater with asset finance solutions using the company's assets for future growth potential

 

Receivables typically are financed in the 80-90% range and advance rates are then established on inventories and fixed assets, as well as real estate if that is applicable.

 

Companies draw down funds based on that established borrowing base certificate other types of collateral, transactions are settled by making predetermined term payments.

 

EXPLORING OTHER OPTIONS THAT ARE EQUITY-FOCUSED?

 

Naturally, you have the ability to explore options such as angel investors, and venture capitalists when considering the debt and equity financing question. That angel investor brings no debt to the balance sheet, but he or she wants to be paid back in owner equity on their investment! So while you pay no interest on that type of investment, ownership is diluted in your business.

 

 

 CONCLUSION 

 

Business owners can benefit from understanding the benefits of flexible and cost-effective asset-based ABL financing solutions.

 

If your firm has been affected by liquidity concerns and you're one of many business owners searching for business loans, and you need additional funding to survive and grow, check out asset-based lending as a way to unlock cash flow and capital. Small businesses and small business owners in the SME/SMB market are always feeling underserved.

 

Speak to  7 Park Avenue Financial - A trusted, credible and experienced Canadian business financing advisor/partner who can assist you with your financing needs.

 

Whether you have good credit, less than good credit, or even require a business plan, talk to the 7 Park Avenue Financial team today. Making the right financial decisions with solid business funding makes long-term investments easier.

 

 

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION 

 

 

What are the qualifications criteria for asset-based financing? 

 

Companies should be able t meet minimum financing usage requirements by asset-based lenders which vary by type of lender

 

Accounts receivable should be business to business based receivables from a generally creditworthy client based

 

Companies should be able to prepare proper financial statements and aged listings of  accounts receivable, inventory and other assets of the business that demonstrate proper financial controls

The business must not have government arrears in taxes

 

  

What  are some types of asset based loans  

 

Types of   asset loans include:

Accounts receivable financing / factoring companies / confidential receivable financing

Inventory loans

Equipment loans/ lease financing/sale-leasebacks for physical assets

 

Commercial real estate financing/bridge loans for asset-based real estate financing /pledged asset finance

 

  

 What are asset-based lending disadvantages?   

 

Asset-based loan financing  will often, but not always have higher interest rates versus conventional  traditional loans and unsecured loan bank financing and the  business assets are pledged as  collateral for loans in the event of default via a security interest agreement  - Asset-based lending rates will vary via the type of asset-based lender and size of the facility - Most asset based loans can be funded by fixed or variable rates

 

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

Make Invoice Factoring Loans And Asset Based Lending Work ! Looking For A Business Credit Line Solution?

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You Are Looking For Canadian Business Financing!

Unpacking the Differences:  Factoring vs. 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 

               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

 

Asset-Based Lending and Invoice Factoring: Alternative Financing Options Explained

 

Invoice factoring loans are one area of business finance that has slowed the growth of traditional financing via banks in Canada.

 

It's no secret that asset-based lending is on the rise, while not that long ago, we can vouch, that alternative financing was pretty well unheard of. Industry stats both in the U.S.  as well as Canada indicate more and more companies are turning to asset-based lending solutions.

 

A big challenge of any business is the cash flow challenges in times of economic uncertainty and when a business is focused on growing and expanding market share - traditional bank financing may not be available during times like this - that is when alternative financing options such as receivable financing/ factoring, and asset-based lending tend to be a popular solution - The real challenge is knowing which finance option is best for your business.

So why have asset-based financing solutions become one of the most popular financing methods for your company's working capital and cash flow needs?

Asset-based finance solutions and factoring work for a straightforward reason - they monetize one of the essential assets in your business, letting accounts receivable act as security.

 

 

WHAT IS INVOICE FACTORING? 

 

Invoice factoring is a  business financing option which allows businesses to finance outstanding invoices to a third-party commercial finance company in exchange for immediate cash. In traditional invoice finance factoring services, the financing company assumes management and collection of the receivable - The factoring agreement specifies the invoices are  ' sold ' to the fiance company - in bank financing, invoices are assigned to the bank, typically under a general security agreement.

 

Key benefits of factoring invoices include the ability to access cash immediately without any debt coming onto the balance sheet - the company is simply monetizing a balance sheet asset - accounts receivables.

 

Small and medium-sized businesses that need working capital to fund day-to-day expenses and finance growth use factoring, which is not debt financing on the balance sheet.

 

 

THE INVOICE FACTORING PROCESS 

New clients here at 7 Park Avenue Financial always want to know how these 'loans work.  First of all, it's not a loan per se. It's simply a method of selling and cash-flowing your receivables as your generate revenues. Cash advanced on this type of financing is typically in the  80-90 % range and it's at the business owner's option to cash flow some or all of your a/r.

 

 

 

WHAT DOES FACTORING COST? 
 

Confusion exists if only for the terminology commercial lenders and customers use around describing the cost of this financing.

 

That's because this finance method is costed as a ' fee ', not an interest rate. Factoring fees are typically between .75 - 1.25 %, so if your firm has good margins and a reasonable turnover in receivables you are an excellent candidate for factoring loans.

 

FACTORS INFLUENCING PRICING

Other factors that influence your overall cost include :

Size of your facility,

General creditworthiness of your customer base

The amount of time you use the funds for is probably ultimately the largest cost aspect of the financing.  Good asset turnover and lower days sales outstanding lower financing costs!

 

While bank business credit lines are the lowest cost in Canada it's no secret that thousands of businesses simply can't access all or part of the business financing they require.

 

 

IS CONFIDENTIAL RECEIVABLE FINANCING THE BEST FACTORING SOLUTION? 

At 7 Park Avenue Financial, we strongly recommend Confidential Receivable Financing facilities. They allow you to bill and collect your own accounts, generating the cash flow you need to run and grow your business.

A/R financing collateralizes company assets such as receivables, allowing you to finance the other parts of your business, such as inventory, equipment, real estate, etc.

For smaller to medium-sized firms that have exhausted forms of financing such as business credit cards, friends and family loans, collapsing personal investments asset-based lending via a business factoring loan is a logical step to financing operations and growth.

 

  

 

WHAT IS ASSET BASED LENDING?  

 

Asset based lending is a business finance option that allows a business to use the physical assets of the business as a loan or line of credit. Assets financing under this type of facility include combinations of accounts receivable, fixed assets and equipment, inventories, and in some cases real estate.

 

Key benefits of this type of loan or line of credit include the ability to be flexible in drawing down funds as the business needs them and scale finance as sales and assets grow. Assets financing under the facility remain in the ownership of the company. Asset-based lenders are experienced in assessing values and advance rates on each asset category, ie receivables.

 

 WHAT IS THE DIFFERENCE BETWEEN INVOICE FACTORING AND ASSET BASED LENDING? 

 

The key difference between factoring and asset based lending lines of credit is the paperwork around the ownership of the invoices - Under a factoring agreement invoices are ' sold ' to the finance company. In contrast, in asset-based lending assets are secured as collateral for the financing.

 

In traditional factoring the factoring company is involved in the collection of invoices, but in asset based lending, businesses retain ownership and the customer relationship around collections.  As we have noted companies choosing  Confidential invoice financing are in fact allowed to bill and collect their own invoices while still enjoying the benefits of immediate cash access.

 

The timing around financing costs is also another difference - In invoice factoring the financing company purchase invoices at a discount. In contrast, interest rates/ financing costs do not start until facilities are drawn down on and used.

 

  WHICH FINANCE OPTION IS RIGHT FOR YOUR BUSINESS? 

 sE

Several factors will define whether  your firm will best benefit from  factoring or a full asset based lending solution - Those factors are:

 

Type of industry

Cash flow needs,

Growth goals

 

Factoring is best suited for businesses with  higher  volumes of invoices and the need for the firm to access immediate cash to cover business expenses and funding day-to-day operations - The ability to finance working capital investment in accounts receivable is a key factor

 

Asset based lending solutions such as term loans or business lines of credit are best suited for companies needing a full business line of credit that funds accounts receivable, inventories and other business assets. Companies that cannot access all the financing they need from traditional bank financing solutions are solid candidates for asset-based lines of credit.

 

Both solutions help companies with cash flow problems

 

  

KEY TAKEAWAYS: INVOICE FACTORING ASSET BASED LENDING 

 

Invoice factoring is a solid alternative financing option for small businesses needing immediate cash

Invoice factoring is the sale and financing of outstanding invoices st third-party factoring companies

Asset based loans and lines of credit is a full-service financing facility which funds business assets and combines them into one facility

Both solutions, ie  factoring and asset-based credit lines provide fast access to cash once facilities are improved and set up

A company will determine whether it needs invoice factoring or asset based loan solutions based on cash flow needs and the overall  creditworthiness of the business

 

  

 

 CONCLUSION - ASSET BASED LENDING VS. FACTORING  

 

Both invoice factoring financing and asset based lending are creative and alternative finance options that can help a business grow via access to capital around the cash flow needs of the business.

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor with a track record of success.

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK MORE INFORMATION

 

 

Do I lose ownership of my invoices with invoice factoring? 

Yes, invoice factoring involves the selling of outstanding invoices to third-party factoring firms to obtain funds via a cash advance prior to invoice collection - in traditional notification factoring the finance company manages collection and payments.

  

 Does invoice factoring affect my customer relationships?  

In invoice factoring the finance company has contact with customers in the collection relationship, while an asset based lending business credit line allows the company to bill and collect its own receivables as well as manage collections. customers.

   

What industries are suitable for invoice factoring and asset-based lending?   

Any small or medium-sized business that requires working capital to fund operations and growth will benefit from these facilities' cash flow access. More established companies needing full services credit lines to finance a company's assets such as  a/r, inventory and other assets will typically use an asset-based credit line.

 

    

Is factoring considered asset based lending?    

 

Yes, factoring is often considered a type of asset-based lending because it involves selling unpaid invoices to a  commercial lender, who then provides funding based on the value of those assets. Unlike traditional loans, factoring is sometimes non-recourse, meaning that the lender assumes the risk of non-payment by the debtor. The amount of funding available through factoring depends on the borrowing base, which is the total value of the assets/invoices being factored.

Factoring is often used by manufacturing companies and other businesses with rapid expansion and core operations that require additional money to pay invoices and support important differences in payment. The annual percentage rate and additional fees associated with factoring are typically higher than those of traditional term loans, and lenders view factoring from their perspective of collecting payments on the invoice assets purchased. Overall, factoring is a valuable financing option for businesses that require immediate payment and can benefit from the value of funding unpaid invoices.

 

 

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