YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING!
FUNDING YOUR BUSINESS IN THE NEW ECONOMY
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
Transform your business's financial challenges into opportunities with Canada's diverse financing solutions
Securing Your Business's Future: Financing Options in Canada
INTRODUCTION
Business financing. When it comes to funding Canadian businesses there are a tremendous amount of ... mistakes you can make! Almost anything can go wrong, so let's look at how you can ' bulletproof ' some of that financing.
In the world of business financing in Canada, where opportunity knocks success awaits those companies who are well-prepared.
Let the 7 Park Avenue Financial team show you a diverse array of business financing options available in Canada is paramount.
From government-backed initiatives to traditional financial institutions as well as the multitude of alternative financing solutions financing solutions are everywhere .. for those well-informed!
Whether it's invoice financing, equipment loans, business lines of credit, or other funding solutions such as purchase order finance there is a solution for your funding and growth needs. Let's dig in.
WHY DO COMPANIES FAIL TO GET THE FINANCING THEY NEED?
Why do many clients we meet, talk to and help advise us that they have in essence failed at getting the financing they need? That failure can come from a variety of different reasons - however at the end of the day it all comes down to problems caused by the management of the company, the peculiarities of the lending landscape in Canada, and third-party events that range from cataclysmic to simply annoying and time-wasting from a management viewpoint.
How then can the business owner and manager focus on completing any form of Canadian business financing? That might include, for a starter the willingness to see the viewpoint of the lender in negotiations regarding terms, rate, and structure.
HAS YOUR BUSINESS FAILED TO GET FINANCING FOR THE FOLLOWING REASONS?
Many owners/managers see failure in financing more often than success because they are unable to appreciate the time and work that goes into a proper financing process. On the other hand, we also see clients that have taken on improper or too costly financing at almost any price and terms. That of course, if you’re e properly prepared, doesn't have to also be the case.
WHAT TYPE OF FINANCING DOES YOUR FIRM NEED? WHAT STAGE IS YOUR COMPANY IN?
Realism. In Canada, whether you're a start-up, SME sector, mid-market or large corporation you eventually have to face the fact that you're more of a candidate for either traditional or alternative financing.
While many forms of alternative finance are becoming more ' traditional' and time-worn every day the business owner/mgr we meet often is barking up the wrong tree relative to what can be realistically achieved.
In some cases, Canadian government funding programs and in some cases, business grants/wage subsidies can provide the capital you need to start or grow a business.
The Canada Small Business Financing Program is a great tool and small business loan to help bootstrap a business. Recent changes in 2022 are very positive and include the financing of certain intangible assets as well as leasehold improvements and equipment costs for new or used business assets - A personal guarantee is also limited under the program. Also, that guarantee is an unsecured personal guarantee with no personal assets being taken as collateral.
Government loans can also be used to purchase an existing business and the lender's prime lending rate under the program is benchmarked to the BOC prime rate.
HERE ARE THE REQUIREMENTS TO MOVE FORWARD WITH BUSINESS FINANCING
Your ability to present positively and properly your current financial status and needs is key to successful finance.
At a simple level, it means being able to provide year-end financials, and interim statements, and the ability to address any issues that arise out of the analysis of those documents. Business plans and cash flow projections are key for many business applications. At 7 Park Avenue Financial, we prepare a business plan and cash flow projections that meet and exceed the requirements of banks and commercial lenders.
While many larger financings require your lawyer or your accountant business owners can often complete a large if not all of the process themselves, saving significant time and expense, delay, etc.
HERE ARE CANADIAN BUSINESS FINANCING SOLUTIONS TO FUND YOUR BUSINESS - WHICH ONE/ONES WORKS FOR YOUR COMPANY
Businesses that are self-financing have a larger challenge in obtaining traditional bank and term-type financing. Many alternative finance methods such as those listed below can readily supply working capital and cash flow needs.
A/R Financing
Inventory Loans
Access to Canadian bank credit
Non-bank asset based lines of credit
SR&ED Tax credit financing Canada's Scientific Research and Development Program
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Purchase Order Financing
Inventory Finance
Short Term Working Capital Loans/ Merchant Advance
Securitization
KEY TAKEAWAYS
Traditional Financing: Understanding traditional financing options like small business loans, commercial mortgages, and business lines of credit is crucial. These methods provide stable capital for various business needs.
Alternative Financing: Exploring alternative financing methods, including invoice financing and equipment loans, is essential. They offer flexibility and can be especially useful for startups and SMEs.
Investment Landscape: Delving into the investment landscape, such as venture capital and angel investors, is vital. These entities provide equity financing, often critical for scaling a business.
Creditworthiness: Learning about business credit scores is pivotal. Your creditworthiness can significantly impact your ability to secure financing on favourable terms.
Innovative Funding: Investigating crowdfunding and merchant cash advances provides insights into innovative funding avenues that can supplement traditional financing.
Sector-Specific Financing: Recognizing that certain industries, like agriculture or technology, may have specialized financing options tailored to their unique needs is key.
Global Expansion: If you plan to expand globally, understanding export financing options can simplify the process and mitigate risks associated with international trade.
Diverse Financing Sources: Realize that a mix of financing sources often yields the best results. Relying solely on one source can limit your financial flexibility.
Regulations and Compliance: Comprehending the regulatory environment and compliance requirements for each financing option is essential to avoid legal complications.
CONCLUSION - HARNESS THE POWER OF STRATEGIC FINANCING
Unrealistic expectations are a large part of business financing. If you have assets they can be monetized, if you have orders and contracts they can be funded via 7 Park Avenue Financial PO / SUPPLY chain financing solutions.
If there is a bottom line it's simply that you require assistance in educating yourself on financial solutions that are available and applicable to your particular situation around the small business finance challenge.
Call 7 Park Avenue Financial, a trusted, credible and experienced advisor with a track record of assisting funding Canadian businesses. with the business loan solutions they need. You'll be more bulletproof when it comes to making capital decisions that work for your company.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
How do business financing options in Canada cater to different types of businesses?
Different financing options in Canada are designed to cater to the diverse needs of businesses, ranging from startups to established corporations. Options like government grants, bank loans, venture capital, and crowdfunding offer varied benefits, suiting different business stages and goals.
What are the advantages of opting for government grants and loans in Canada?
Government grants and loans often come with lower interest rates and more favourable terms compared to private-sector loans. They are particularly beneficial for startups and small businesses needing financial support without the burden of steep repayment terms.
How do venture capital and angel investors contribute to business growth in Canada?
Venture capitalists and angel investors not only provide financial backing but also bring expertise and networking opportunities. This can be crucial for businesses aiming for rapid growth, expansion, and access to new markets.
Are there specific financing options for innovative or tech-based businesses in Canada?
Yes, innovative or tech-based businesses in Canada have access to specialized financing options like tech grants, R&D tax credits, and venture capital focused on tech startups, encouraging innovation and technological advancement.
What should Canadian businesses consider when choosing a financing option?
Businesses should consider factors like the amount of funding needed, repayment terms, interest rates, and the potential impact on business equity and control. It's also important to assess the fit of the financing option with the business's long-term goals and growth plans.
What role does owner credit score play in securing business financing in Canada?
A strong credit score can significantly enhance a business's chances of securing financing in Canada. It reflects financial reliability, influencing lenders' decisions and possibly resulting in better loan terms and interest rates.
Can non-profit organizations in Canada access business financing options?
Yes, non-profit organizations in Canada have access to specific financing options, including grants, low-interest loans, and fundraising platforms, tailored to support their unique operational and funding needs.
How does the Canadian economic climate affect business financing availability?
The Canadian economic climate directly impacts the availability and terms of business financing. Economic growth can lead to more lending and investment, while a downturn might tighten financing availability and increase scrutiny on loan applications.
How can Canadian businesses prepare for applying for financing?
Canadian businesses should prepare a detailed business plan, financial statements, and projections. It's also crucial to understand their credit score and have a clear plan for how they intend to use and repay the financing.
What is the difference between equity and debt financing in Canada?
Equity financing involves selling a portion of the business ownership in exchange for capital, while debt financing means borrowing money to be repaid over time. Equity financing can dilute ownership but doesn’t require repayment if the business fails, whereas debt financing requires regular repayments regardless of business success.
How can new startups access financing in Canada
Government Grants and Loans: Startups in Canada can benefit from various government programs offering financial assistance. These grants are typically sector-specific, supporting areas such as innovation, research and development, or business expansion are are solid solutions for firms unable to secure financing from a traditional financial institution.
Bank Loans: Traditional bank loans remain a common source of startup financing. Canadian banks often have specialized programs for small businesses and startups, featuring competitive interest rates and favorable terms.
Accelerators and Incubators: These programs provide more than just financing; they offer mentorship, resources, and networking opportunities, usually in exchange for a percentage of equity. They're particularly beneficial for startups needing guidance and industry connections.
Friends and Family: Borrowing money from personal connections is often an initial source of funding for startups. This method typically offers more flexible repayment terms and lower interest rates.
Credit Lines and Business Credit Cards: These financial tools can be used for short-term financing needs or to assist with managing cash flow during the early stages of a startup.
What is the Canada Small Business Financing Program
The Canada Small Business Financing Program (CSBFP) is designed to assist small businesses in Canada in obtaining loans from financial institutions by sharing the lending risk. Over the past decade, this program has facilitated over 53,000 loans, totaling $10 billion.
Eligibility Criteria:
- Targeted at small businesses or start-ups operating within Canada.
- Annual gross revenue must be $10 million or less.
- Farming businesses are not eligible (they can refer to the Canadian Agricultural Loans Act Program).
Financing Limits:
- Maximum loan amount for a borrower: $1.15 million.
- Term loans: Up to $1,000,000 per borrower.
- Maximum of $500,000 for leasehold improvements or equipment.
- Up to $150,000 can be used for intangible assets and working capital costs.
- Lines of credit: Up to $150,000.
Application Process:
- Loans are provided and approved by financial institutions.
- Applicants should discuss their business needs with an officer at any bank, caisse populaire, or credit union in Canada.
- Approved loans are registered with Innovation, Science and Economic Development Canada (ISED).
Usage of Funds:
- Term loans cover costs like purchasing/improving land or buildings for commercial use, equipment, leasehold improvements, intangible assets, and working capital costs.
- Specific uses include commercial vehicles, restaurant equipment, computer or telecommunications equipment, production equipment, and franchise purchasing costs.
- Lines of credit are for working capital costs, i.e., daily operating expenses.
Interest Rates:
- Term loans:
- Floating rate: Lender's prime rate plus a maximum of 3%.
- Fixed rate: Lender's residential mortgage rate for the loan term plus a maximum of 3%.
- Lines of credit: Lender's prime rate plus a maximum of 5%.
Registration Fee:
- 2% of the total loaned amount (term loans) or authorized amount (lines of credit).
- Can be financed as part of the loan.
Financing Terms:
- Lenders may take an unsecured personal guarantee.
- Security must be taken on the financed assets for real property and equipment loans. For leasehold improvements, intangible assets, working capital costs, and lines of credit, security on other business assets is required.
