YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING OPTIONS FUNDING!
BUSINESS FINANCES 101!
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
Email = sprokop@7parkavenuefinancial.com
Business Financing Options in Canada require a ' crafting' of your specific needs to your firm and your industry.
While all entrepreneurs can be forgiven for thinking their company is special the reality is that many of the funding needs of any industry are in fact quite similar as they relate to capital needs, cash flow dynamics, etc. Let's dig in.
3 MAIN SOURCES OF BUSINESS CAPITAL
How do the Canadian small businesses and their financial managers tap into ' the right finance options? Ultimately it comes down to 3 sources of long-term or operating capital -
Small Business Financing Options :
Bank Loans and debt based financing from Canadian chartered banks for low-interest rates for established businesses - Financing approvals can often be time-consuming for many firms who are not prepared to meet bank requirements - High-risk companies can typically not achieve traditional bank financing solutions
Government Small business loans
Independent non-bank commercial finance and leasing companies - very well suited for companies with growing sales and high growth potential for a non bank line of credit or asset based lending approach
Tapping into angel investors, family and friends, equity funding/equity financing, venture capital/ venture capitalists and private equity, small business grants/business credit cards, etc can be an exhaustive and often incorrect approach and are not the best options, given most firms are just not suited for this type of funding. The boot-strapping approach can be painful!
IS THE FINANCING NEED SHORT TERM OR LONG TERM
In some cases the financing you undertake will be temporary, other times it will be long term in nature. Temporary financing is very valuable in that they are often more accessible, and solves urgent needs, but of course, comes with a higher borrowing cost. The goal of every owner/ finance manager, particularly in the SME sector is to ensure that over a long period of time you have the operating capital you need... to survive.. and grow. Lenders will also place emphasis on the good credit of the owner/owners and the business credit history.
GOVERNMENT LOANS IN CANADA / SMALL BUSINESS LENDING PROGRAMS
One positive aspect of the government’s role in business is the programs and type of financing they underwrite for some very ' niche ' financings. For firms focused on raising capital without giving up equity, one of these is the SBL - The Government small business loan program. Providing financing up to $ 1,000,000.00 for firms with less than 10 Million in actual or projected revenue is what this program is all about. A newer business (as well as an existing business) can often take advantage of the program
Coupled with very generous rates, terms, and loan structures that satisfy even start-ups or franchisee borrowers we can heartily recommend that program to any client. Personal credit history is important and owners should be able to demonstrate a score of at least in the 650 range when they borrow money against personal credit history as one factor. Typical repayment terms are two years to 5-year terms.
The banks of course are the government 'operating partner' in the SBL loan program. If we have to state one thing we personally have never liked it's how each bank has its own version of how they administer the program - trust us that some banks are better than others in this regard.
Startups are difficult to finance, so your ability to get started properly at an early stage in your planning process is key. Business plans are key to approaching banks and commercial lenders for working capital and business term loans - demonstrating your ability to repay the loan with proper cash flow projections, etc. At 7 Park Avenue Financial, we prepare a business plan that meets and exceeds the needs of all lenders.
DON'T FORGET TO ACCESS TAX CREDIT FINANCING OPTIONS
We're the last to be fond of heavy government involvement in business - but we're the first to have a strong respect for SR&ED credits for research, as well as the film/TV and animation credits that populate the Transmedia industries in Canada. And the better news is that both of these tax credits can be financed either when filed or in some cases before. Your ability to ' cash flow' the government promise to pay you is... quite frankly... a good thing. Working capital to finance your business on a day-to-day basis is as important as a long term focus.
THE BUSINESS CREDIT UNION
Credit unions in Canada have never been major traditional lenders to Canadian business - that is changing a bit... some seem more interested than others, but their localized approach and limited funding have some challenges for Canadian business borrowers.
FINANCING ALTERNATIVES - NON-TRADITIONAL FINANCING WORKS!
What then are some of the other alternatives that can be crafted into providing your firm with all your business financing needs? They include cash advance programs for retailers, asset-based non-bank lines of credit for revolving credit facilities, and equipment financing firms. All of these tend to be the domain of non-bank commercial finance firms versus traditional lenders.
THE COST OF FINANCING / INTEREST RATES
While non-bank solutions are always available, they tend to be more expensive, so the business owner/manager must be prudent around the cost and benefits of non-bank capital. The type of funding you may want or need is directly related to your overall credit profile and is determined by either traditional or alternative financing solutions. Having proper and up-to-date financial statements on your business is key to success in funding a company.
DEBT AND EQUITY - THE OPTIMAL BUSINESS CAPITAL STRUCTURE
We're talking mostly about debt financing and asset monetization, not equity business funding. So it’s all about ensuring you're able to match the benefits of any funding with the cost of that capital. While capital might be high because of your firm's particular circumstances it can still help you grow revenues and turn profits. No business owner wants to decrease his or her ownership stake if they can assume financing as an alternative.
WARREN BUFFET ON ' VALUE '
We're reminded of Warren Buffett’s great line ‘PRICE IS WHAT YOU PAY, VALUE IS WHAT YOU GET '. His bottom line was simple... business financing options might be considered expensive but never let them overtake ultimate value when it comes to choosing business funding, particularly non-bank in nature.
CONCLUSION - FINANCING FOR YOUR BUSINESS!
How much financing does your business need? If you’re looking for the right ‘ playbook’ or script on proper business funding for day-to-day operations or high growth needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business funding needs. Depending on the type of small business and industry you are in the 7 Park Avenue Financial team will get you the best financing option for your needs.
FAQ/ FREQUENTLY ASKED QUESTIONS / MORE INFORMATION
What is a merchant cash advance?
Merchant cash advances are one of the most popular financing options for small businesses. The original concept of this type of financing was to provide an upfront lump sum payment to small businesses in exchange for a percentage-based long term loan -
Unlike a bank term loan these loans are short term working capital solutions and come with shorter repayment terms and defined installment payments that are tailored specifically to sales and cash flow. Invoice financing / factoring for financing trade credit is an alternative and less costly alternative to ' MCA ' merchant cash advances and there are different types of A/R financing such as Confidential Receivable Financing for funding sales and outstanding invoices.
The small business owner must be aware of the higher interest rates under these advances, which are generally easy to obtain as online loans / online lending and peer to peer solutions for funding business expenses.
What are SBL Loans?
The SBA loan is a type of business debt that can be taken out by either the organization itself or one of its approved lenders under the U.S. Small Business Administration - The Canadian equivalent of these financing programs is the Canada Small Business Financing Program. The interest rates for these loans in both the U.S. and Canada are competitive and are an alternative for firms unable to raise traditional bank loans for financing needs. In Canada, the government designates a specific financial institution such as a bank or credit union to administer the loan. These financial institutions originate the loan that the government guarantees under the Industry Canada mandate.
Click here for the business finance track record of 7 Park Avenue Financial
