YOUR COMPANY IS LOOKING FOR A BUSINESS LOAN!
WORKING CAPITAL LOANS / BUSINESS FUNDING
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 originates business financing solutions for Canadian Businesses – We offer BUSINESS LOAN FINANCING & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Canadian Business Loan Financing Solutions
Canadian chartered banks, usually by their ‘relationship’ with business owners and entrepreneurs, can pass on valuable business advice, financing tips, and information on business loans and working capital financing options for start-ups or smaller firms.
Although the banks are a solid source of such information, the banks themselves, by their charters and credit policies, cannot directly satisfy the customer's financing needs.
MAXIMIZE BUSINESS POTENTIAL VIA TRADITIONAL AND ALTERNATIVE BUSINESS FINANCING SOLUTIONS
Business loan financing allows businesses to fund growth and capitalize on new opportunities. Whether your firm is early stage or established, the right funding makes ( or breaks !) your business - Talk to the 7 Park Avenue Financial team about finance solutions that make sense for your company.
BANK FINANCE PARTICIPATION IN THE SME ECONOMY
Financial institutions, including Canadian banks, play a significant role in the SME economy.
While we may or may not agree with Canadian banking policies on start-up and young venture financing, we should appreciate the bank’s stance—they are lending out our capital at very low rates, potentially losing the entire investment if your firm can’t repay loans and financing.
ASSESSING WHAT STAGE OF GROWTH YOUR COMPANY IS IN
How can small or newer businesses succeed in financing options for their working capital needs?
Businesses of the size we are discussing need thousands, literally millions, of dollars of financing to fuel their growth in Canada. In the commentary we provide, it is essential to note that as companies develop along the ‘stage of development‘ timeline, they have much more access to traditional bank and private equity financing.
Small business funding options are available to help businesses in various industries overcome challenges and achieve their growth goals.
We are primarily talking about earlier-stage companies, which may still be developing products and services and may not be profitable as they start delivering and billing them. Nevertheless, they still need working capital loan financing in the short term.
So what are the immediate challenges of firms that cannot provide traditional financing, and what are, more importantly, some immediate solutions?!
The challenge is all about asset turnover in current assets, such as accounts receivable and inventory, and ensuring you can finance those two critical assets of your business.
Managing current liabilities, such as account payables, is vital to maintaining good relations with suppliers and vendors. Management must constantly know how to anticipate negative working capital positions.
HERE ARE FINANCIAL INSTITUTION FINANCING CHALLENGES THE BUSINESS OWNER FACES
The challenges tend to be painfully apparent to the Canadian business owner or financial manager who has worked to get traditional bank and equity financing. They are as follows:
Perceived industry or product risk
No collateral
Uncertain financial projections
Limited Performance history
Funding short-term working capital costs such as accounts receivable and inventory
How can the Canadian business entrepreneur overcome these very traditional roadblocks and challenges? There are several ways.
SUMMARY OF TRADITIONAL AND ALTERNATIVE FINANCING SOLUTIONS FOR WORKING CAPITAL COSTS - WHICH ONE WORKS FOR YOU?
First of all, all alternative methods of financing should be pursued.
Alternative financing methods are least dependent on the risks and challenges mentioned above.
Those alternative methods of financing might include:
A/R Financing - Invoice financing for unpaid invoices
Inventory Loans
Access to Canadian bank credit/lines of 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 A personal credit score is essential.
Securitization
SELF FINANCE? OR A GOVERNMENT OF CANADA SMALL BUSINESS LOAN
Therefore, banks often encourage business owners to ‘self-finance ‘the venture via equity or owner capital and commitment.
It is a misconception that banks play a key and significant role in financing new ventures. Possibly the only exception to this statement is that the banks offer up, in their role, as guarantors of the loan to banks.
The SBL loan program is a Canadian federal government program that sometimes provides loans up to $1,000.000.00 for purchasing real estate, business assets, leasehold improvements for leased property, intangible assets, and franchise fees. Farming businesses have a separate loan program that is similarly structured.
(The more typical loan amount is $350,000.00.) The Canada Small Business Financing Program's repayment terms are flexible, and it is the most popular program for small business loans in Canada.
A one-time registration fee, usually 2% of the loan amount, is payable to the government and can be financed with the loan.
Lump sum payments can impact the loan repayment structure and should be considered for accurate financial planning.
KEY TAKEAWAYS
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Loan types: Understanding various financing options tailored to specific business needs
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Creditworthiness: Recognizing the importance of personal and business credit scores
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Collateral considerations: Evaluating secured vs. unsecured loan options
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Repayment structures: Analyzing interest rates, terms, and payment schedules
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Application essentials: Preparing comprehensive documentation for loan approval
CONCLUSION
In summary, newer or smaller firms fall into the ‘ void ‘ area of financing, where very few traditional financing strategies can be implemented. At a time when cash flow and working capital are most critical and access to lines of credit and funding is critical, small business owners find themselves on a continuous treadmill of cash flow needs.
Loans are registered with Industry Canada. The new name is Innovation, Science and Economic Development Canada (ISED), and once the borrowing criteria are met and financial institutions approve the loan,
Looking for help with the type of loan and business credit solution you need? Small business owners should review non-alternative strategies that can be very helpful in early growth periods and take advantage of financing to capitalize on business opportunities.
Call 7 Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.
FAQ
How can business loan financing help my company grow?
Business loan financing provides the capital needed to invest in new equipment, expand operations, hire additional staff, or increase inventory. This enables your company to seize growth opportunities and scale more rapidly than relying solely on organic growth.
What types of business expenses can loan financing cover?
Business loan financing can cover a wide range of expenses, including working capital, equipment purchases, real estate acquisitions, inventory management, marketing campaigns, and even debt consolidation, providing flexibility to address various financial needs.
Are there tax benefits associated with business loan financing?
Yes, interest paid on business loans is generally tax-deductible as a business expense, potentially reducing your company’s taxable income and overall tax liability. This makes loan financing an attractive option for many businesses.
How does business loan financing compare to equity financing?
Unlike equity financing, which involves giving up ownership stakes in your company, business loan financing allows you to maintain full control of your business while accessing necessary capital, making it an appealing option for entrepreneurs who want to retain decision-making power.
Can business loan financing help improve my company's credit profile?
Responsibly managing a business loan can help establish and improve your company's credit profile, potentially leading to better terms on future financing and increased credibility with suppliers, partners, and other stakeholders.
What documentation do I need to apply for a business loan?
You typically need to provide financial statements, tax returns, a business plan, bank statements, legal documents (such as business licenses), and information about collateral, if applicable. The specific requirements may vary depending on the lender and type of loan.
How long does the business loan approval process usually take?
The business loan approval process can vary widely, ranging from a few days for some online lenders to several weeks or months for traditional banks or SBL loans. Factors influencing the timeline include the loan type, amount requested, and completeness of your application.
What happens if I can't repay my business loan?
If you're unable to repay your business loan, consequences may include damage to your credit score, loss of collateral (for secured loans), legal action from the lender, and potential bankruptcy. It's crucial to communicate with your lender early to explore potential solutions if you're experiencing financial difficulties.
Are there special business loan programs for minority-owned businesses?
Yes, there are several loan programs specifically designed for minority-owned businesses, including SBL 8(a) Business Development loans, USDA Rural Business Enterprise Grants, and various state and local initiatives. These programs aim to promote diversity and equal opportunities in business financing.
How do lenders determine the interest rate for a business loan?
Lenders consider multiple factors when determining interest rates for business loans, including your credit score, business history, loan amount, loan term, collateral offered, and your business's overall financial health. Market conditions and the lender's risk assessment also play a role in setting rates.
What are the key differences between secured and unsecured business loans?
Secured loans require collateral, such as property or equipment, which the lender can claim if you default. These loans often have lower interest rates and higher borrowing limits. Unsecured loans don't require collateral but typically have higher interest rates and stricter eligibility requirements due to the increased risk for lenders.
How can I improve my chances of getting approved for a business loan?
To improve your chances of loan approval, SME / Small businesses focus on boosting your personal and business credit scores, preparing a solid business plan, gathering comprehensive financial documentation, considering offering collateral, and choosing a loan type that best fits your business needs and qualifications. Building a strong relationship with a lender before applying can also be beneficial.
What role does cash flow play in business loan financing decisions?
Cash flow is critical in business loan financing decisions as it demonstrates your ability to repay the loan. Lenders analyze your cash flow statements to assess your business's financial health, stability, and capacity to handle additional debt. Strong, consistent cash flow can significantly improve your chances of loan approval and potentially secure better terms.
