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Financing & Cash flow are the biggest issues facing business today
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Canadian Business Financing serves as the lifeblood of entrepreneurial growth, fueling innovation and economic prosperity across the country.
Unlock your business potential: Discover how Canadian Business Financing can turn your dreams into reality.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Canadian 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”
Canadian Business Financing: Finance Companies Solutions
Canadian business financing… works when you have business owners and financial managers in Canada who know how to be successful with the right type of finance for their company—as well as a lender or institution that wants to share that success with you.
For the business owner, the reward for successful small business financing is growth and profit; for the lender, it is repayment with a reasonable interest rate commensurate with credit risk.
A well-structured business proposal is crucial in securing financing, as financial officers at banks or credit unions review these proposals to make loan decisions.
We ensure clients understand the alternatives when we speak to clients about financing choices. Let’s examine five of those.
One of the newer methods, relatively speaking, that Canadian firms use to finance growth is the selling of their receivables as they generate sales.
This form of financing is also known as receivable financing, invoice discounting, factoring, etc.
By employing this finance method, they generate typically 90% of any sale into direct cash, with the other ten percent, less financing costs, coming to them when their client pays.
Although there is a strong perception in the Canadian marketplace that this type of financing is expensive.
It becomes less expensive when business owners utilize that cash to sell more, take supplier discounts, and purchase more effectively with newfound cash.
Quite frankly, this method of financing works best when you partner with the right finance firm and have the right type of facility in place.
A lesser-known method of Canadian business financing is purchase order or supply chain financing. This works best when you have legitimate orders from bona fide clients and need to be able to pay your supplier significantly before your firm receives final payment from your client.
PO and Supply Chain finance can float you through a busy season or time of year.
Smaller firms and retail organizations have a real challenge in financing their firms. This is because they traditionally don’t have the assets sought after by banks and other finance firms when it comes to working capital and cash flow financing.
So, the solution here is bridge loans, typically collateralized by inventory and cash flows. Normally, you would supply three months of recent bank statements showing your business's inflows and outflows.
ACQUIRING BUSINESS ASSETS AND TECHNOLOGY
80% of all North American businesses employ equipment financing, which allows them to have up-to-date assets that won’t become obsolete when they are needed for production, operations, etc. If a business qualifies, it can finance new or used equipment to secure funds for eligible purchases.
Almost anything can be leased and financed, and all credit qualities are eligible based on the creative structuring offered by lessors in Canada.
As a business owner, you must decide whether to enter into a capital lease or an operating lease, depending on whether you will ultimately dispose of the asset at the end of the lease term.
That method of financing, lease finance, nicely brings us into # 4 in our list of 5 methods of business finance. Here, the concept is customer financing—offering a finance program for your clients when you have a product that can be financed.
Setting up a program with a qualified partner allows you to sell more, generate cash flow on the sale immediately, and be perceived by your client as a full-service vendor that truly adds value to their operations.
Finally, don’t forget the government SBL loan, aka the 'Canada Small Business Financing Program ', which is, bar none, the best available financing for new or established firms with fewer than 10 million dollars of revenue. It offers great rates, terms, and structures and is a solid solution for financing equipment loans, existing leasehold improvements and certain intangible assets under a term loan structure. On approval, a 2% registration fee is due. Many start ups utilized the program to provide financing for their venture.
Farming businesses in Canada have a separate program.
KEY TAKEAWAYS
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Understanding loan types: Familiarize yourself with financing options tailored to business needs.
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Credit assessment: Recognize the importance of personal and business credit scores in securing favourable terms.
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Collateral evaluation: Learn how assets can be leveraged to obtain better loan conditions and lower interest rates.
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Cash flow analysis: Master projecting and managing cash flow to demonstrate repayment capacity.
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Government programs: Explore federal and provincial initiatives designed to support small businesses financially via an authorized financial institution for funding for working capital costs, equipment financing, real estate, leasehold improvements on leased property
CONCLUSION
Speak to 7 PARK AVENUE FINANCIAL, a trusted, credible and experienced Canadian business financing advisor, on putting together a package or financing request that correctly positions your firm for financing success with real-world funding solutions.
FAQ
What are the main advantages of utilizing a Canadian Business Financial solution?
Canadian Business Financing offers numerous benefits, including access to capital for growth, improved cash flow management, and the ability to invest in new equipment or technology. It can also help businesses weather economic downturns and seize market opportunities.
How can Canadian Business Financing help me expand my company?
By providing the necessary capital, such as term loans, Canadian Business Financing enables you to fund expansion projects, hire new employees, increase inventory, or enter new markets. This financial support can be crucial in scaling your business and achieving long-term success.
Are there specific Canadian Business Financing options for startups?
Yes, several financing options cater to startups in Canada, including government grants, angel investors, funding for real property, and startup-focused loan programs. These options often have more flexible terms and may provide additional support beyond just funding.
Can Canadian Business Financing help improve my company’s competitiveness?
Absolutely. With the right financing, you can invest in cutting-edge technology, streamline operations, or develop new products, giving you a competitive edge in the market.
How does Canadian Business Financing contribute to job creation?
Canadian Business Financing indirectly supports job creation by providing businesses with the capital needed to grow and expand. As companies scale up operations, they often need to hire more employees, contributing to overall economic growth.
What role do credit unions play in Canadian Business Financing?
Credit unions are important players in Canadian Business Financing. They often offer more personalized service and competitive rates compared to traditional banks. They may also have more flexible lending criteria and a deeper understanding of local business needs.
How does the Canadian Business Development Bank (BDC) support entrepreneurs?
The BDC is a crown corporation dedicated to supporting Canadian entrepreneurs. It offers financing solutions, advisory services, and specialized programs to help businesses start, grow, and overcome challenges.
What are the tax implications of different Canadian Business Financing options?
The tax implications can vary significantly depending on the type of financing. For example, interest on business loans is generally tax-deductible, while equity financing doesn’t offer the same tax benefits. It’s crucial to consult with a tax professional to understand the specific implications of your situation.
How does Canadian Business Financing differ for rural versus urban enterprises?
Rural businesses may face unique challenges in financing, but specialized programs are also designed to support rural economic development. These may include targeted government grants or loans with more favourable terms for businesses in rural areas.
What role does intellectual property play in securing Canadian Business Financing?
Intellectual property can be valuable when seeking financing, particularly for technology or innovation-driven companies. Some lenders may consider patents, trademarks, or copyrights as collateral, potentially improving your chances of securing funding or obtaining better terms.
What factors do lenders consider when evaluating a Canadian Business Financing application?
Lenders typically consider factors such as credit score, business plan quality, cash flow projections, collateral, industry trends, and the business owner’s experience when making lending decisions. They aim to assess the overall risk and potential return on investment.
How has technology impacted Canadian Business Financing in recent years?
Technology has significantly transformed Canadian Business Financing through the rise of online lending platforms, AI-driven credit assessments, and blockchain-based solutions. These innovations have made the application process faster, more accessible, and often more cost-effective for borrowers.
What are some common mistakes to avoid when seeking Canadian Business Financing?
Common mistakes include underestimating the financing needed, failing to prepare a comprehensive business plan, neglecting to improve personal and business credit scores, and not shopping for the best terms. It’s also crucial to avoid over-leveraging your business and have a clear repayment strategy.
