YOUR COMPANY IS LOOKING FOR BUSINESS CREDIT!
ACCESSING BUSINESS LINES OF CREDIT
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
Suite 301
Oakville, Ontario
L6J 7J8
What does a good business line of credit cost? Actually, there are some definite answers to that question regarding business line of credit loans in Canada, but the better question, in effect your ‘rethink' might well be what does it cost if your business financing doesn't have access to this type of financing. Let's dig in.
THE NEED FOR REVOLVING CREDIT FACILITIES
A revolving credit line (it’s not a loan per se) is almost always a requirement for any type of business that sells on commercial credit to business clients. (Retailers and others that sell on cash are often deemed to be self-financing without the need of revolving facilities)
THAT BULGE IN YOUR FINANCING NEEDS
A lot of the demand for a business credit line is driven not by the ebb and flow of your business, but by seasonal demands and bulge requirements around things like large purchase orders and contracts awarded to your firm.
Experienced and successful business owners and financial managers plan well for repayment of their ' term' debt; but it's just as important, and possible, to take the same approach in a revolving business credit line.
HOW MUCH BUSINESS CREDIT DO YOU NEED?
A very common question posed to us by clients is in fact 'how much of a revolving credit facility will we actually need and apply for?' The actual need can actually be nicely mapped out by certain key 'assumptions' you make in some key components of your business.
And those key components? They include things like your starting cash balance, anticipated collections based on your terms and collection experience, and the rate of interest charged by your bank or commercial finance firm partner. The right size facility will allow you to draw on cash flow needs as your firm requires, while avoiding huge negative outflows that will impair your abilities to run your business - i.e. payroll, loan payments, supplier commitments, etc.
FINANCING THE STARTUP / EARLY STAGE COMPANY
Startup or early-stage companies have a huge challenge when it comes to obtaining true bank lines. Because they don’t have profits, historical cash flow and other outside collateral more often than not they need to address non-bank sources of business credit. Short term financing for a new small business is always challenging - let 7 Park Avenue Financial point out solutions! On any small business loan, the personal credit score of the owner is key to success in business loan approval. Credit limit and interest rates are also important to investigate.
ALTERNATIVE SOURCES OF CANADIAN BUSINESS FINANCING
These include:
A/R Financing
Inventory Loans
Access to Canadian bank credit
Non-bank asset-based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance
Securitization
These solutions allow business owners to not have to raise outside equity, offer up personal collateral, or put personal credit history at risk.
Business credit lines are used to run and grow your business - they can also be key components of a major growth plan, or even when you are considering merging with or acquiring another business. In many cases, firms that have found themselves in dire straits use these types of facility to help manage a ' turnaround’ ABL 'Asset-based ' credit lines are non-bank in nature and best suited to this type of strategy.
Oh, and what does a business credit line cost? Current bank rates are at all-time lows so typical rates are in the 4-5% range, sometimes lower, sometimes higher. Non-bank rates can provide double the liquidity but are 3-4 times more expensive, but deliver on capital and cash flow you require. Our advice – focus as much on access to capital as cost of capital. Both are important.
CONCLUSION
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you 'rethink' financing requirements for small businesses in Canada.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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