Business Loans: Growing Your Canadian Company | 7 Park Avenue Financial

 

Tweet

 

YOUR COMPANY IS LOOKING FOR A BUSINESS LOAN!

CASH FLOW LOANS AND 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

 

 

"The road to success is paved with well-planned financing." - Michael Dell

 

Stop watching opportunities pass by. Transform your business's potential into reality

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”

 

BUSINESS LOANS SOLUTIONS

 

 

 

When businesses take out bank loans or other institutional loans, the payments are 99% of the time fixed and specified.

 

The business owner and financial manager must ensure those payments can be made. If the company has over-relied on debt, the lender views it as high leverage and considers it challenging to get a small business cash flow loan or line of credit.

  

 

From Financial Struggle to Business Success: Your Guide to Smart Business Funding  

 

Having all the capital your business needs is never a challenge—the ability to grow your business and take on new opportunities happens when you have the right business financing.

 

 

3 Uncommon Takes on  Business  Loans

 

1. Seasonal business loans as a tax optimization strategy
2. Using business loans to build corporate credit before you need it
3. Leveraging business loans for competitor acquisition rather than organic growth

 

DID YOU KNOW?

 

• 67% of Canadian small businesses seek external financing annually
• Average business loan amount in Canada: $250,000
• Online lenders process applications 60% faster than traditional banks
• 82% of rejected applications cite poor credit as the main factor
• Business loans with collateral receive 35% better interest rates

 

 

 

 

Business Loans: A Tool to Determine Debt and Cash Flow Support

 

How can a business owner determine if the company has the cash flow to support the debt? More importantly, how does the lender calculate and assess the value of business assets?

 

Banks and other term lenders focus on the ‘Times Interest Earned ‘calculation. The business owner (and the banker) can simply calculate that formula.

 

 

The Times Interest formula is calculated as follows:

 

Net profit before taxes, plus interest expense / divided by interest expense

 

The calculation becomes an absolute number. If the number is, in fact, ‘1, ‘that means that the company has made just enough to pay the exact interest expense for the year. We would point out that this calculation is usually done on an annual basis.

 

So is ‘1’ the magic number? The answer is no, which should be intuitive to the business owner. That is because a times interest of 1 means there is no cushion for anything going wrong, and all business owners know about Murphy’s Law!

 

So if earnings decline or the company takes on additional debt, our ‘ times interest earned ‘ number becomes unsatisfactory - that is to say that we have determined insufficient cash flow to service the debt.

 

 

DEBT LEVELS VARY BY INDUSTRY FOR SMALL BUSINESSES

 

We have determined that '1' is not a great number. Then, well, what is? The answer, as in many facets of business, is, of course, 'that depends '.

 

Many industries differ, and there is not really any specific number that is viewed as the Holy Grail by lenders. What we have found, though, is that higher is better than lower. When the number hovers around 1, the business owner and the lender should and will have some concerns.

 

TAX AND ACCOUNTING ISSUES AND INTEREST RATES

 

We also point out that income, as a key component in our calculation, varies between companies in the final calculation regarding tax rates and other accounting adjustments. Some lenders and business owners also depreciate the profit because it is not a real cash expense.

 

RELATIONSHIP OF CASH FLOW TO DEBT AND MONTHLY PAYMENTS

 

Another quick calculation business people can perform is calculating the cash flow number as a percentage of debt.

 

Lenders often require business assets as collateral to secure the loan and mitigate their risk. Lenders usually calculate this to ensure the long-term debt is not misused.

 

If a company has a high percentage of total debt to cash flow, it should be a strong indicator to the company owners that growth will be constrained. All cash is going to debt, not growth. Therefore, new equipment, inventory, receivables, etc., will suffer in terms of growth.

 

ELIGIBILITY AND REQUIREMENTS

 

Your business must meet specific requirements to be eligible for a small business loan.

 

These include:

 

• Being a small business or start-up operating in Canada with gross annual revenues of $10 million or less.

• Not being a farming business (a similar program for the farming industry is the Canadian Agricultural Loans Act Program).

• Having a good credit standing and a solid business plan.

• Meeting the specific requirements of the financial institution you are applying to.

 

 

It’s important to note that each financial institution may have its own eligibility criteria, so it’s best to check with them directly to confirm their requirements.

 

Ensuring your business meets these criteria can significantly improve your chances of securing the financing you need.

 

FINANCING SOLUTIONS

 

We offer a variety of financing solutions to help small businesses achieve their goals.

 

These include:

 

• Term loans: These can be used to finance various business expenses, such as equipment purchases, leasehold improvements, and working capital costs.

• Lines of credit: These can be used to pay for working capital costs, such as day-to-day operating expenses.

• Small business loans can finance a wide range of business needs, from expansion to equipment purchases.

 

 

Our financing solutions are flexible and tailored to meet your business's unique needs. Whether you need funds for immediate expenses or long-term investments, we have options to help you succeed.

 

APPLICATION PROCESS

 

Applying for a small business loan is a straightforward process. Here’s what you need to do:

 

1. Discuss your business needs with a financial officer at a bank, caisse populaire, or credit union in Canada.

2. The financial officer will review your business proposal and make a decision on your loan application.

3. Once the decision is made to provide financing, the financial institution will disburse the funds and register the loan with Innovation, Science and Economic Development Canada (ISED).

 

 

You can also apply online through our website, and one of our business specialists will be in touch with you to discuss your application. This streamlined process ensures you can access the funds you need quickly and efficiently.

 

WORKING WITH A FINANCIAL INSTITUTION

 

Working with a financial institution can be a great way to get the financing you need for your small business. Here are some benefits of working with a financial institution:

 

• Access to a wide range of financing options: From term loans to lines of credit, financial institutions offer various solutions to meet your needs.

• Competitive interest rates: Financial institutions often provide favorable rates, helping you manage your loan costs effectively.

• Flexible repayment terms: Tailored repayment schedules can help you manage your cash flow and meet your financial obligations.

• Expert advice and guidance: Experienced business specialists can provide valuable insights and support throughout the loan process.

 

 

When working with a financial institution, it’s important to understand the terms and conditions of your loan, including the interest rate, repayment terms, and any fees associated with the loan.

This knowledge will help you make informed decisions and manage your finances effectively.

 

 

7 PARK AVENUE FINANCIAL - BUSINESS SUPPORT

Our business specialists are here to help you every step of the way. They can provide you with expert advice and guidance on:

 

• Choosing the right financing option for your business.

• Understanding the terms and conditions of your loan.

• Managing your cash flow and making monthly payments.

• Growing and expanding your business.

 

 

Our business specialists are experienced professionals who understand the unique needs of small businesses. They are dedicated to helping you achieve your business goals and ensuring you have the support you need to succeed.

 

 

POSITIONING YOUR COMPANY WITH FINANCIAL INSTITUTION LENDERS

 

In summary, by making actual current calculations and projections, business owners can easily calculate their ‘times interest earned’ and cash flow as % of the debt.

 

This will allow the business to position loan repayments positively with their lenders while also providing them with insights into how the bank or other lender will view payment capability. Having up-to-date financial statements is key to any business loan process, as is your agreement to deliver on a probable personal guarantee request and the use of business assets as collateral.

 

 

A VARIETY OF BUSINESS FINANCING OPTIONS

 

Small business owners are continually looking for a small business loan. Whether it's a business line of credit dependent partially on your credit score or asset-based short-term loans with interest rates commensurate with your credit quality, all these solutions require knowledge of the relationships of key parts of your balance sheet.

 

Some solutions, such as merchant advances for small businesses, are unlike term loans and can help the business owner succeed in cash flow lending.

 

Whether it's a business line of credit or a cash flow advance, liquidity is key to moving your business forward on a daily basis.

 

The small business owner's search for working capital is pretty close to never-ending.

 

Cash flow financing, whether business credit is related to the type of loan you are looking for to fund a short-term need or a long-term goal, is key to business success.

 

Some firms address short-term needs via a business credit card, which is a temporary solution to long-term needs.

 

The application process for online lenders offering short-term working capital loans and merchant cash advances has never been quicker. However, these loans come with higher interest rates and are a short-term solution to your firm's credit crunch.

 

 

KEY TAKEAWAYS

 

 

• Financial statements' health determines most loan approvals - focus on clean, organized books

• Credit scores significantly impact interest rates and terms offered

• Cash flow metrics matter more than total revenue for loan servicing

• Collateral requirements vary dramatically by loan type and amount

• Understanding the debt service coverage ratio drives approval decisions

 

 

Asset-based lending services geared to liquidity and capital needs can often address traditional bank loan options. Accounts receivable solutions are today's most popular alternative financing option in the business loan environment.

 

 CONCLUSION

 

 

Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor with a Track Record, To Ensure your firm qualifies for the right business loans in Canada, traditional or alternative.

 

 

FAQ

 

How can business loans accelerate company growth?

• Enables rapid inventory expansion

• Supports hiring key personnel

• Allows for equipment upgrades

• Provides working capital flexibility

• Helps seize time-sensitive opportunities

 

 

What financing options best suit seasonal businesses?

 

• Line of credit for fluctuating needs

• Short-term loans for inventory

• Flexible repayment schedules

• Revenue-based options

• Bridge financing solutions

 

 

How do business loans impact cash flow management?

 

• Stabilizes operating expenses

• Creates financial buffers

• Enables bulk purchase savings

• Supports accounts receivable gaps

• Maintains a steady growth trajectory

 

 

What makes business loans better than using personal credit?

 

• Builds business credit history

• Protects personal assets

• Offers larger funding amounts

• Provides tax advantages

• Establishes business credibility

 

 

How quickly can business loan funding improve operations?

 

 

• Immediate inventory expansion

• Same-day equipment purchases

• Rapid hiring capabilities

• Swift market expansion

• Quick competitive response

 

 

What documentation is typically required for a business loan?

• Business plan

• Financial statements

• Tax returns

• Bank statements

• Credit reports

 

 

How long does the business loan approval process take?

 

 

• Online lenders: 24-48 hours

• Traditional banks: 2-4 weeks

• SBL Government  loans: 30-90 days

• Credit unions: 1-2 weeks

• Specialized lenders: 3-5 days

 

 

What types of collateral are typically accepted?

 

• Commercial real estate

• Equipment and machinery

• Inventory

• Accounts receivable

• Personal assets

 

 

What affects business loan interest rates?

 

 

• Credit score impact

• Business history influence

• Industry risk factors

• Market conditions

• Collateral quality

 

 

How do different business loans compare?

• Term loan structures

• Line of credit flexibility

• Equipment financing specifics

• Government SBL loan advantages

• Alternative lending options

 

 

What factors determine the right loan amount for your business?

• Current revenue patterns

• Growth projections

• Debt service capacity

• Working capital needs

• Industry benchmarks

 

 

How do seasonal business cycles affect loan choices?

• Revenue fluctuation impact

• Payment scheduling options

• Cash flow management strategies

• Inventory financing needs

• Credit line flexibility

 

 

What role does credit history play in loan approval?

• Business score importance

• Personal credit influence

• Payment history impact

• Credit utilization effects

• Score improvement strategies