YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING FROM SPECIALTY LENDERS - THE NON-BANK SOLUTION!
SMALL BUSINESS FINANCING .. SOLVED!
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?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Non Bank Business 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”
What Are Non-Bank Lenders? Alternative Business Funding: The New Path to Success
Business financing loans from specialty lenders continue to appeal strongly to business owners and financial managers who are challenged by the challenge of growing (and running!) their businesses.
What is the appeal of specialized non-bank financing for business lending, and why should they be considered an alternative solution to more traditional funding from a commercial bank? We’re doing some ‘fact-checking’ for you, so let’s dig in on Specialty Finance lenders!
INTRODUCTION
Non-bank alternative finance lenders operate outside the traditional banking system in Canada. These lenders offer different types of flexible financing and allow today's companies to access business capital and unique financing structures.
Alternative business funding has become vital to the financial landscape, providing businesses access to capital beyond traditional banking channels that offer unsecured credit .
This section will delve into the definition and explanation of alternative business funding, its brief history, and its evolution.
BREAK FREE FROM BANK BARRIERS - ALTERNATIVE BUSINESS FINANCING!
Canadian businesses often hit roadblocks with traditional bank financing, facing rigid requirements and lengthy approval processes.
This frustration intensifies when urgent opportunities require quick capital, potentially costing you valuable business growth.
Let 7 Park Avenue Financial show you how Non-bank lenders offer a powerful solution, providing faster approvals, flexible terms, and innovative funding options tailored to your business needs.
3 Uncommon Takes On Alternative Finance
- Non-bank lenders strengthen the financial ecosystem by creating healthy competition and innovation in lending practices.
- The rise of non-bank lending is pushing traditional banks to modernize their lending processes.
- Non-bank lenders often have superior risk assessment models due to their specialized industry focus.
Definition and Explanation of Alternative Business Funding
Alternative business funding refers to nontraditional financing options for businesses that may not qualify for traditional bank loans or require more flexible terms.
These options include non-bank lenders, specialty finance companies, and other financial institutions that offer a range of financing solutions, such as
Invoice financing,
Asset-based lending
Unlike traditional banks, these non-bank lenders provide innovative and tailored financial products that address the unique needs of businesses, ensuring they have the necessary capital to grow and thrive.
Brief History of Alternative Funding and Its Evolution
The alternative funding industry has experienced significant growth over the past two decades, driven by technological advances, changes in the regulatory environment, and shifting borrower needs.
In the aftermath of the 2008 financial crisis, traditional banks tightened their lending criteria, creating a gap in the market that alternative lenders filled. This shift allowed non-bank lenders to emerge as key players in the financial system, offering more accessible and flexible financing options.
Alternative funding has become a mainstream option for businesses seeking capital, with the global market projected to reach $1.9 trillion by 2025. This evolution highlights the increasing importance of non-bank lenders in providing financial stability and supporting business growth.
What is a Specialty Finance Company?
Specialty finance companies are non-bank lenders that provide financing solutions to businesses that may not qualify for traditional bank loans.
These companies often specialize in specific industries or types of financing, such as business transportation leasing companies and mortgage finance companies/mortgage investment corporations, which focus on providing loans for residential mortgages.
By targeting niche markets, specialty finance companies can offer more customized and flexible financing options that cater to their clients' unique needs.
What Drives the Need for Business Financing?
Businesses require financing for various reasons, including expansion, working capital, and equipment purchases. Traditional banks may not always be able to meet these needs, particularly for small businesses or those with non-traditional credit profiles.
Non-bank lenders fill this gap by providing financing solutions tailored to businesses' specific needs. Institutional investors, such as pension funds and insurance companies, also support the alternative funding industry by providing capital to non-bank lenders.
This collaboration ensures businesses have access to the necessary funds to support their growth and operational needs, even when traditional bank lending is not an option.
In the next section, we will explore the benefits and drawbacks of non-bank lending, including the advantages of flexible repayment options and the potential disadvantages of higher interest rates.
WHAT IS A SPECIALTY FINANCE COMPANY
Specialty finance firms in Canada are non-bank lenders, typically non-regulated, that provide business loans to small and medium-sized companies in Canada when traditional bank financing may not be available to a firm. Non bank financial intermediaries are specialists in these types of business funding.
WHAT DRIVES THE NEED FOR BUSINESS FINANCING
Two fundamental factors that drive the small business need for financing around business loans include your company's size and ‘life-stage‘(i.e. start-up, growth mode, mature business, etc.).
Many businesses that cannot qualify for a traditional bank loan or choose to avoid traditional banking prefer non-bank solutions.
The other key factor related to this is the owner/financial manager's decision to take on more debt or, alternately, seek out more owner equity.
Remember also that many forms of specialized financing, including:
A/R Financing - trade-credit factoring
Inventory Finance
Sale Leasebacks
SR&ED Tax credit financing
It can solve your problem without bringing any new debt to the balance sheet.
That’s because those solutions we’ve named monetize assets you already have. In many cases, owners’ credit score is not as important an approval factor as in traditional financing when accessing approval for term loans or a business credit line.
WHAT SECURITY OR COLLATERAL IS REQUIRED BY THE SPECIALTY LENDER?
Many clients are confused about the documentation and security required for various alternate financing types.
While many solutions from specialty finance lenders that are non-bank in nature differ from bank financing, the reality is that much of the documentation around these financings is quite similar.
That includes GSA’S (General Security Agreements), which are the backbone of more senior all-encompassing facilities, as well as personal guarantees from owners.
The personal guarantee issue for owners tends to be thorny, and as a general rule, less ' reliance' is placed on those ' PG'S ' that are the bane of the entrepreneur.
Higher Interest rates are more prevalent in alternative finance: the business owner's questions become one of access to capital versus the cost of capital.
GOVERNMENT LOANS
We argue that one other form of alternative finance that can be considered more ‘ traditional’ in nature is often overlooked.
That’s the ‘Government of Canada Guaranteed Small Business Loan‘ program. Recent changes to the limits definitely favour start-ups or emerging firms in the small—to medium-sized commercial finance arena.
When it comes to small business loans in Canada, the Small Business Financing Program for a small business loan/startup loan is one of the best and most accessible solutions.
Rates for the program can be a variable interest rate of fixed - the borrower's choice. You can repay the loan over a typical 2-5-year term, and we note that a limited personal guarantee is only required.
In small business government loans, credit score and personal credit history must be acceptable when applying for business credit under the program.
The program finances equipment, technology, leasehold improvements, and real estate. The typical loan credit limit/loan amount is $350k, although real estate can be financed up to $1 million.
The program should not confuse loans and lines of credit. The term loan is the finance solution—it is not a lump sum loan/line of credit.
Banks and credit unions are the financial institutions that administer the program. Any business can apply, even a proprietorship.
Let the 7 Park Avenue Financial team walk you through the program and be your guide to getting approved!
HOW DOES THE APPLICATION PROCESS FOR GOVERNMENT SMALL BUSINESS LOANS WORK?
Some view the application process as cumbersome, but 7 Park Avenue's financial business plans for the program meet and exceed bank requirements.
A business plan is a typical requirement for many types of financing or bank loans. Any company or business with less than 10 million dollars in revenue can apply for a government SBL loan.
There is a one-time processing fee due on approval, which can be bundled into the loan.
ALTERNATIVE LENDING SOLUTIONS FROM NON BANK LENDERS
While assets, cash flow and profits, and reasonable owner equity are key requirements for bank financing for a line of credit/term loan in Canada, the broad appeal of specialty financing is that not every one of these requirements has to be in place for business financing loans from specialized commercial finance firms.
These firms include:
Equipment Lessors
Merchant Cash Advance/ Business Credit Card - flexible repayment terms tied to your cash inflows
Factoring Companies
Asset-Based Lenders - non-bank lines of credit
Merchant Advance companies / Working Capital Small Business Loans
Sales Royalty finance companies
Real Estate Bridge Loan Lenders
While financing solutions specialty lenders and non-bank lenders don’t necessarily focus on firms in a distressed financial position, the hardcore reality is that the solutions they offer are often perfectly suited to ‘ righting the ship. ‘
By the way, even firms in the process or state of bankruptcy have access to specialized lending, which can often save the company. At that point, the interest rate is rarely discussed!
KEY TAKEAWAYS
-
Understanding credit requirements drives successful applications with non-bank lenders, focusing on business performance over personal credit.
-
Revenue-based lending models unlock funding based on cash flow patterns rather than traditional metrics.
-
Asset-based financing leverages existing business resources to secure better terms
-
Alternative documentation requirements speed up approvals compared to traditional banking processes.
-
Industry-specific expertise allows non-bank lenders to evaluate risk more accurately in specialized sectors.
CONCLUSION - TRADITIONAL BANKS OR ALTERNATIVE FINANCE?
Looking for some serious ‘fact-checking’ on business loans and forms of non-bank financing that will work for your firm?
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your business financing loans and asset monetization needs for small businesses in Canada.
FAQ
How do non-bank lenders offer faster approvals than traditional banks?
-
Streamlined application processes
-
Digital documentation submission
-
Automated initial assessments
-
Dedicated account managers
-
Specialized industry knowledge
What makes non-bank lending more flexible than traditional options?
-
Customizable repayment terms
-
Multiple funding options are available
-
Less rigid qualification criteria
-
Creative collateral solutions
-
Industry-specific understanding
Why do businesses often prefer non-bank lenders?
What unique funding solutions do nonbank lenders provide?
How can non-bank lenders help during seasonal fluctuations?
-
Flexible payment schedules
-
Line of credit options
-
Quick access to working capital
-
Seasonal payment adjustments
-
Cash flow-based solutions
Alternative Business Funding: The New Path to Success
What risks should I consider with non-bank lending?
-
Higher interest rates possible
-
Shorter repayment terms
-
Various fee structures
-
Less government regulation
-
Different collection practices
How do I choose the right non-bank lender?
What documentation will improve my approval chances?
How do non-bank lenders evaluate creditworthiness?
What makes non-bank lenders different from traditional banks?
-
Faster approval processes
-
Alternative evaluation methods
-
Specialized industry focus
-
Flexible terms
-
Innovative products
What security measures do non-bank lenders typically require?
-
Personal guarantees
-
Business assets
-
Accounts receivable
-
Equipment liens
-
Real estate collateral
