YOUR COMPANY IS LOOKING FOR FINANCING FOR YOUR BUSINESS!
ACCESSING THE RIGHT BUSINESS LOANS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"The best way to predict the future is to create it." - Peter Drucker
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer BUSINESS LOAN FINANCING and working capital solutions – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Financial Freedom to Funding Success?
As a business owner, you know Canada's commercial long-term landscape is tough. Between rates, the overall economy, and opportunities that arise that you can't take advantage of, it's a jungle out there!! Let the 7 Park Avenue Financial team improve your odds of securing capital!!
DID YOU KNOW?
- 26% of Canadian small businesses sought external financing in 2023
- Average business loan approval rate: 15-20% at traditional banks
- Alternative lender approval rates reach 65-75%
- Median business loan amount: $150,000
- Average processing time: 15-30 days at banks
- 72% of businesses seek financing for expansion
INTRODUCTION
Business finance in Canada. Regarding loan financing in Canada, we're the first to admit we hate it when people flog a dead horse. (Is that even politically correct to say?)
So, we promise this will be the last installment of the revelations we received during a CEO summit for BDC.
The subject is access to financing, and nothing interests us more than that! While a survey posts questions and responses, we thought it even more prudent to add some real-world commentary and solutions.
FINANCING IS A CHALLENGE FOR SMALL AND MEDIUM-SIZED BUSINESSES IN CANADA
Of course, it was no surprise to us that 62% of Canadian business owners and financial managers found financing their businesses both difficult and ‘somewhat difficult’.
This highlights the need for solutions to overcome challenges such as purchasing equipment and paying suppliers. The bottom line is that half of your competitors are in the same boat as you, so don’t feel overly bad.
SMART FINANCING SECRETS SUCCESSFUL BUSINESSES KNOW
THE LONG ROAD TO EQUITY FINANCING
The survey also revealed that many new businesses are out there seeking equity financing of some form.
While only a very small number of Canadian firms are successful in seeking VC or Private equity financing, many business owners/managers still feel their firms are candidates for some sort of equity finance.
Sadly, few get to the goal line. Naturally, those friendly VC guys will be all over you if you’ve got the most incredible story ever told, sales, profits, and high growth potential. Good luck with that.
So if equity or quasi-equity financing isn’t available for your firm, you’ve got two other solutions: take on term debt or, our favourite, monetize and finance existing assets via a business loan tailored to your needs.
In addition to tangible assets like equipment and real estate, financing can also support intangible assets such as intellectual property and brand development.
As a business owner, have you explored every aspect of asset and cash flow financing?
CANADIAN BUSINESS FINANCING SOLUTIONS
These include:
A/R Financing
Inventory Loans
Access to Canadian bank credit Commercial bank financing from our Chartered banks and government crown corporations
Non-bank asset based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing: New or Used Equipment can be financed
Cash flow loans/ business credit cards
Royalty finance solutions
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance Owner credit score and personal credit is vital in these programs; they are easily accessible but these working capital costs come at a higher interest rate- loans are often approved in 24 hours via easy application processes - A typical loan amount is less than 200k
Securitization
The Canada Small Business Financing Program is a solid solution for many small businesses in Canada. Sponsored by Industry Canada, it’s a term loan for the acquisition of financing for leasehold improvements / real property improvements, equipment, and real estate.
It’s arguably one of Canada's best small business loans for startups, early-stage companies, and even franchises that utilize the program regularly. However, many loan options, including term loans and lines of credit, may come with a registration fee, typically a 2% fee based on the total loan amount.
You’re usually eligible for any or most of the above simply because your business is growing. However, as our survey noted, financing will always be more challenging if you’re downsizing, outsourcing, or finding your business in a death spiral.
Not impossible, but a challenge. Interest rates for small businesses will vary depending on the type of financing accessed, the amount of financing, and the overall business credit profile.
TRADITIONAL FINANCING VERSUS ALTERNATIVE FINANCING IN CANADA
In Canada, small businesses have various financing options to support their growth and development. Traditional financing options, such as term loans and lines of credit, are typically offered by financial institutions and often require collateral.
Like those available through the Canada Small Business Financing Program (CSBFP), these options provide access to capital at competitive interest rates. They are secured by assets such as real property or equipment and offer flexible repayment terms.
However, traditional financing can come with stricter eligibility requirements and a longer application process.
Conversely, alternative financing options, such as invoice financing and crowdfunding, offer more flexible repayment terms and may not require collateral.
These options can provide quick access to capital, making them suitable for small businesses with limited credit history or collateral. However, it’s important to note that alternative financing options often come with higher interest rates and fees than traditional financing.
Understanding the differences between these options can help small businesses make informed decisions about their financing needs.
In the survey, 43% of all Canadian business respondents indicated they were either unsuccessful or only partially successful in getting the financing they received.
A good example of a solid solution is as follows: Many companies don’t meet qualifications for bank financing these days, simply because their ratios and covenants are out of order. However, they are absolutely eligible for an asset-based line of credit from a non-bank commercial lender.
The upside? This solution actually gives you more financing than you would obtain from a chartered bank facility. Trust us!
KEY BUSINESS FINANCE NEEDS: CASH FLOW
The main categories for business finance needs in the survey are those clients talk to us about daily. Common reasons for the need to access funding include:
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Equipment and Technology Assets
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Inventory finance
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Lines of credit/ working capital/ short term business loans
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Leasehold improvements
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Intangible assets such as intellectual property and brand development
TYPES OF BUSINESS LOANS
Small businesses in Canada have access to various types of business loans, each designed to meet different needs. Term loans, lines of credit, and invoice financing are the most common options.
Term loans provide a lump sum of capital that must be repaid over a fixed amortization period. These loans often finance large purchases, such as equipment or real property.
On the other hand, lines of credit offer access to a revolving line of credit that can be used to cover ongoing expenses, such as working capital or leasehold improvements. This flexibility makes lines of credit ideal for managing cash flow fluctuations.
Invoice financing is another popular option, providing quick access to capital by advancing funds against outstanding invoices. This type of financing helps improve cash flow and reduces the risk of late payments, allowing businesses to maintain smooth operations.
ELIGIBILITY AND REQUIREMENTS
Small businesses must meet specific eligibility criteria to qualify for a business loan.
These requirements often include a minimum credit score, a specific annual revenue level, and a certain number of years in business.
Additionally, businesses may need to provide collateral, such as real property or equipment, to secure the loan.
The Canada Small Business Financing Program (CSBFP) has its own eligibility requirements. To participate, businesses must have a maximum annual revenue of $10 million and meet a minimum credit score threshold. The program also requires collateral, such as real property or equipment, to secure the loan. Meeting these requirements can significantly improve a business’s chances of securing financing.
LOAN APPLICATION AND APPROVAL PROCESS
The loan application and approval process can vary depending on the type of loan and the financial institution. Traditional financing options, such as term loans and lines of credit, often involve a longer application process. This process typically includes a credit check and collateral evaluation, which can take time.
Alternative financing options, such as invoice financing and crowdfunding, usually have a quicker application process and may not require collateral. These options can provide faster access to capital, making them ideal for businesses needing immediate funding.
LOAN TERMS AND REPAYMENT OPTIONS
Loan terms and repayment options can vary widely depending on the type of loan and the financial institution. Traditional financing options, such as term loans and lines of credit, often come with fixed interest rates and repayment terms. This predictability can be beneficial for long-term financial planning.
Alternative financing options, such as invoice and crowdfunding, may offer variable interest rates and more flexible repayment terms. These options can be tailored to fit a business's unique needs, providing greater flexibility.
The Canada Small Business Financing Program (CSBFP) offers flexible repayment terms, including a maximum amortization period of 10 years. The program also features a fixed interest rate determined by the financial institution.
Small businesses can choose to repay the loan through monthly or quarterly payments and may be eligible for lump sum payments or early repayment options. This flexibility helps companies to manage their cash flow more effectively.
By understanding the various financing options and their respective terms, small businesses in Canada can make informed decisions that best support their growth and financial health.
WHY MANY BUSINESSES IN CANADA CAN'T ACCESS BUSINESS FUNDING SOLUTIONS FROM FINANCIAL INSTITUTIONS
Your peers and competitors in the survey indicated they didn’t receive access to financing because of the size of their firm, their inability to meet ‘ratios’, or their inability to provide solid personal guarantees and additional collateral, making it difficult to overcome challenges in securing necessary funding.
SOME UNCOMMON TAKES ON BUSINESS LOANS
- Alternative lenders often provide faster approvals for businesses with strong cash flow but poor credit scores.
- Seasonal businesses may benefit more from revolving credit than traditional term loans
- Combining multiple smaller loans can sometimes offer better terms than a single large loan
KEY TAKEAWAYS
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Cash flow analysis demonstrates repayment ability more effectively than credit scores.
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Proper documentation preparation accelerates approval timelines significantly.
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Understanding debt service coverage ratios impacts lending decisions fundamentally.
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Strong business plans influence financing terms substantially
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Revenue consistency matters more than total income volume
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Collateral quality affects interest rates dramatically
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Personal guarantees reduce lender risk considerably
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Industry experience weighs heavily in approval decisions
CONCLUSION - SECURE YOUR FUNDING NOW!
While our great banks in Canada provide over 64% of all financing to businesses, make sure you explore the firms and types of financing that provide the other 36%.
Your finance business needs, when successfully attained, will allow you to grow revenues for your products and services. 43% of all companies in Canada maintain that they utilize a trusted, credible, and experienced Canadian business advisor or firm such as 7 Park Avenue Financial to help them with their financing needs.
FAQ
How does business loan financing differ from personal loans?
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Business loans evaluate company performance
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Higher borrowing limits available
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Tax-deductible interest payments
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More flexible use of funds
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Multiple financing structures are possible
What factors most influence approval decisions?
Which documentation proves most crucial for approval?
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Bank statements demonstrate cash flow
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Tax returns verify reported income
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Financial statements show business health
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Business plans justify loan purpose
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Personal financial statements assess guarantor strength
What key requirements improve business loan approval success rates?
Understanding business loan financing requirements significantly improves approval chances. Lenders evaluate cash flow statements, credit history, and business plans comprehensively. Preparation increases success rates by 65%.
How do flexible repayment terms benefit business borrowers?
Business loan financing offers flexible repayment terms tailored to your cash flow. Monthly, seasonal, or revenue-based payments accommodate various business models. This flexibility helps maintain healthy working capital.
What advantages do different types of business financing options provide?
Multiple financing options provide strategic advantages for different needs. Equipment loans preserve working capital, while lines of credit offer ongoing flexibility. Choose solutions that match your specific growth requirements.
How quickly can alternative lenders approve business loan applications?
Faster approval processes mean seizing time-sensitive opportunities quickly. Alternative lenders often provide decisions within 24-48 hours. Swift funding helps capitalize on strategic business opportunities immediately.
Why is professional loan packaging important for business financing?
Professional loan packaging dramatically increases funding success rates. Properly structured applications receive preferential treatment. Expert preparation can improve terms and reduce interest rates significantly.
